Serps

confusedpensioner62

I contracted out of SERPS for 5 years, then advised to contract back in, now I receive my State Pension, but the Pension Service have deducted the total amount from it that I receive from the private pension scheme, so what was the point?

dunstonh

The point is that the personal pension is paying the income, not the state.

You didnt think you were going to get both did you?

confusedpensioner62

No I didn't expect to get both, I wasn't sure what proportion the state paid from the contributions I made, but I didn't expect to no better off(as I was told I would be better off) I didn't expect the state to deduct the exact amount that I was receiving from the private pension.

jamesd

How are they deducting it, what reason is given?

Normally you wouldn't get a deduction, just reduced additional state pension because of the lower amount of money put into the state pension. The contracted out money could be taken before state retirement age and depending on investment performance could pay more or less than the given up additional state pension.

casey_junior

confusedpensioner62 wrote: »

I contracted out of SERPS for 5 years, then advised to contract back in, now I receive my State Pension, but the Pension Service have deducted the total amount from it that I receive from the private pension scheme, so what was the point?

To answer you in a non belligerent way, the point is that personal pensions are to benefit Financial Advisers like dunderhead.

dunstonh

casey_junior wrote: »

To answer you in a non belligerent way, the point is that personal pensions are to benefit Financial Advisers like dunderhead.

Yes, I earned a fortune out of confusedpensioner62. In fact, I think I will bill him again... and twice just for fun. I am sure confusedpensioner62 was grateful for your useless comment.

confusedpensioner62, jamesd is correct. They dont normally deduct it. They show what you would have got had you been contracted in to allow you to compare it to what you are getting with your protected rights fund within your personal pension.

casey_junior

Confusedpensioner62, welcome to the pensions forum where if you dare state that you have been sold a pup by a so called financial adviser, those of the same ilk will bite you with their self righteousness.
Yes, your venture into personal pensions yielded no gain for yourself, but a guaranteed commission for the FA at start up, another for some other at maturity and a tidy income for the Provider all along,not to mention the cut the taxman gets.
People like yourself and myself who are approaching retirement are now finding that we have been conned by both government and the financial industry.

dunstonh

Confusedpensioner62, please disregard casey junior. He has a chip on his shoulder as he doesnt understand his plan and has decided to be troll on other peoples threads irrespective of whether his contract or issues has any similarity to yours or not (and it doesnt).

confusedpensioner62

The Pension Service do state what I would have got had I stayed contracted in, then state what I have earned from being contracted out, take the one from the other then I get the difference added to my State Pension, I was just led to believe that I would be better off contracting out, I didn't realise that it would be the same difference had I stayed in(although the one good point being that I had the option of having the lump sum which I took, otherwise the private bit would stop when I die)

dunstonh

I was just led to believe that I would be better off contracting out, I didn't realise that it would be the same difference had I stayed in(although the one good point being that I had the option of having the lump sum which I took, otherwise the private bit would stop when I die)

The odds of it being exactly the same are unlikely. However, since 1997 when Labour reduced the rebates (stealth tax) it made the benefits of being contracted out far less. Indeed, it is generally considered cost neutral. When the SIB dis a review in 1996 they found that everyone that had contracted out to that point was financially better off.

However, I suspect you are misreading the paperwork. They would show what you get from contracting in. Then deduct it. The pension from contracting out is then paid from the personal pension. Is the pension annuity you are buying exactly the same, to the penny as the figure? If it is, then perhaps you should enter the lottery this week as the odds of winning that have to be lower than having an identical match.

noh

confusedpensioner62 wrote: »

The Pension Service do state what I would have got had I stayed contracted in, then state what I have earned from being contracted out, take the one from the other then I get the difference added to my State Pension, I was just led to believe that I would be better off contracting out, I didn't realise that it would be the same difference had I stayed in(although the one good point being that I had the option of having the lump sum which I took, otherwise the private bit would stop when I die)

I think you are misunderstanding the information the Pension Service are providing to you.
They state the amount you would have got had you stayed contracted in. They then subtract an amount called the contracted out deduction.
The contracted out deduction is calculated to a set formula and represents the amount of SERPS/S2P you have given up by contracting out.
Depending on how and where you invested your contracted out contributions your protected rights pension may be greater or smaller than the contracted out deduction.

The Pension Service have no idea of how much your protected rights pension is paying only how much you have given up by contracting out.