Serps confusion connundrum!

bobi22

dunstonh,
I spoke to a man from the NI contributios branch today who categorically told me that I was contracted out from 3rd. September 1979 up to 5th April 1987.
(when I started my apprenticeship until Devonport went private)

and I have read about the beginning being 1988 myself, but who am I to contradict the man in the department????

secondly,

Adds support to the point that you are just looking to complain to make a quick buck.

Of couse I am trying to maximise my potential retirement income!
Who wouldn't?

If I hadn't been advised by an IFA to opt out in the first place, I wouldn't have done so, and would have been none the wiser about it now, and probably would have had more in the fund now. So why shouldn't I try and redress the balance somewhat.

Its not about makng a "quick buck" - as i just stated, I do realise that the money wont come into my personal possession (until I reach retirement age hopefully)

all I try & keep saying is :- what have I to lose by trying? (I know you are going to say "money" & I am going to repeat that I have to speak to the firm concerned before taking this any further.

Look - forget about any misselling claim, what about what SHOULD be in MY serps fund, as opposed to what IS in the funds?

dunstonh

What if they WERE able to get compensation in the region of £17000/£18,000, into the NPI fund pot wouldn't that make it worth it??
i dont know?

First you have to prove negligence and thats going to be damned hard. Secondly, you are only looking at the years that the NPI plan was contracted out and any redress that may be due would only be based on those years. Early rebates were high but later rebates were lower. So, you may not find you are financially worse off from an income point of view.

I spoke to a man from the NI contributios branch today who categorically told me that I was contracted out from 3rd. September 1979 up to 5th April 1987.
.... and I have read about the beginning being 1988 myself, but who am I to contradict the man in the department????

Contracting out with an occupational scheme is different to contracting out with an appropirate personal pension plan (APPP). You couldnt contract out of SERPs into a personal pension until 1988.

When you are contracted out with an occupational scheme, in simple terms, that money is beeing used to pay towards the occ scheme. When you contract out into a personal pension, that money goes into a pot and is invested. The idea being that this is your money and in your hands and not the Govt who have it within their right and potential to take it off you if you are contracted in. As said, 3 times since it was introduced, the Govt has reduced SERPs and has not clawed back funds from those that contracted out. It would require Primary legislation to do that and would cripple the stockmarket and create more problems than its worth.

Of couse I am trying to maximise my potential retirement income!
Who wouldn't?

There was something published earlier in the year that showed on avearge people were only around £2pw worse off by contracting out and that is after a stockmarket crash and in the short term.

If I hadn't been advised by an IFA to opt out in the first place, I wouldn't have done so, and would have been none the wiser about it now, and probably would have had more in the fund now. So why shouldn't I try and redress the balance somewhat.

How do you know you are worse off?
1 - If Govt do kill off serps/S2P in favour of a single higher state pension, you will be better off by contracting out as you will get the higher state pension and keep your contracted out funds.
2 - you can take your contracted out benefits at age 55 if you want but not until age 65/66/67/68 (depending on your date of birth) if contracted in.
3 - You can take 25% as a tax free lump sum on your contracted out funds but not your contracted in.
4 - death benfits could be better when contracted out (although you would be dead so lets not worry about that here).

An investment portfolio averaging 3% above inflation can still return put you in the position of having more income from contracting out than you would get from contracting in. The problem is that the NPI pension just isnt capable of doing that. There are plenty of investments that are.

all I try & keep saying is :- what have I to lose by trying?

And that is just the problem with the UKs compensation culture right now.

bobi22

Thanks,
I appreciate what you are saying, but,

First you have to prove negligence and thats going to be damned hard. Secondly, you are only looking at the years that the NPI plan was contracted out and any redress that may be due would only be based on those years. Early rebates were high but later rebates were lower. So, you may not find you are financially worse off from an income point of view.

I dont have to prove anything to anyone - the ambulance chasers would. They win, I win, they lose -i'm no worse off than at present.

Contracting out with an occupational scheme is different to contracting out with an appropirate personal pension plan (APPP). You couldnt contract out of SERPs into a personal pension until 1988.

Are you saying that i cannot do anything about those first 8/9 yrs worth of serps in the dockyard occ scheme? if so, fair enough, i wont worry about it.

There was something published earlier in the year that showed on avearge people were only around £2pw worse off by contracting out and that is after a stockmarket crash and in the short term.

If that is true then any miss selling compensation hearing would surely fail? If that was the case then the "ambulance chasers" wouldn't bother trying surely? then why are there so many firms willing to use their resources to such effect on a no win - no pay basis?

How do you know you are worse off?

I don't per se, but if those ambulance chasers manage to get compensation from an ombudsman then I would say that I probably was? If they dont?
point 1. Nothing I can do about that up until this yr. (now contracted back in)
point 2. Wasn't planning on taking anything early as I was always led to believe that you lose out in the long run - as I stated earlier, that may or may not be a false assumption?
point 3. as above.
point 4. I wasn't worried about that bit either :rotfl:

And that is just the problem with the UKs compensation culture right now.

Why is that a problem?

I will just state for the record that I have never personally actively sought any type of compensation for anything before. These people came to me cold calling & I am just trying to establish the worth of their argument - I am still open minded on my future actions here.

What I dont understand is your dogmatic refusal to see that "I may: have a case here?

What would you do if you found out 17 years later that some action you were "advised" to take in the past could seriously affect your future?

Lastly,

An investment portfolio averaging 3% above inflation can still return put you in the position of having more income from contracting out than you would get from contracting in. The problem is that the NPI pension just isnt capable of doing that. There are plenty of investments that are.

Please advise where I can find these better investments?? Can you name names/companies where to go?

thanks,

dunstonh

Are you saying that i cannot do anything about those first 8/9 yrs worth of serps in the dockyard occ scheme? if so, fair enough, i wont worry about it.

Nope. That is part of the normal arrangement with a final salary scheme.

If that is true then any miss selling compensation hearing would surely fail? If that was the case then the "ambulance chasers" wouldn't bother trying surely? then why are there so many firms willing to use their resources to such effect on a no win - no pay basis?

Take a look at the number of ambulance chasers with endowments and compare that with those looking at people contracted out. Its only the desperate ones that are trying it on.

I don't per se, but if those ambulance chasers manage to get compensation from an ombudsman then I would say that I probably was? If they dont?

But what grounds are your complaint going to be? You cant complain because you think you may be better off if you had stayed contracted in because an ambulance chaser said it was no win no fee. You have to state why you believe you were mis-sold.

point 1. Nothing I can do about that up until this yr. (now contracted back in)

Why did you contract in this year? Why didnt you contract in last year or any of the previous years when NPI wrote to you asking you if you wanted to remain contracted out or not? Copies of those letters will be made available to support the fact that you choose to remain contracted in after being given the choice.

point 2. Wasn't planning on taking anything early as I was always led to believe that you lose out in the long run - as I stated earlier, that may or may not be a false assumption?
point 3. as above.

Replace my comments on early retirement then with those on later retirement. You can defer the contracted out pot until later as well.

Quote:
And that is just the problem with the UKs compensation culture right now.
Why is that a problem?

Because it costs money for everyone involved. Including you in the long run. Children wont be able to play in playgrounds, trees get cut down, hospitals wont undertake operations where there is some risk. It is easier for people to sue now with no consequences if they dont win.

What I dont understand is your dogmatic refusal to see that "I may: have a case here?

What would you do if you found out 17 years later that some action you were "advised" to take in the past could seriously affect your future?

I give advice out every day that impacts on peoples futures over the long term. Many decisions are made on areas that have no clear cut option. Its often a case of balancing the pros and cons of each option and then choosing one. Some decisions will be right, some will be wrong. Contracting out is one of those areas.

I see this as you not knowing if you should be contracted in or out, which option is best for you but willing to put in a complaint on the hope of getting some free money.

Here is some information from the FSA from last year:

The FSA investigation found that a lot depended on when individuals had opted out, how long they were contracted out for, their age, and the performance and charges of the personal pension scheme they then chose.
Those that contracted out in 1988, the first year it was possible to do so, are now looking at a pension that would be on average £4 smaller than if they had chosen to remain in SERPS, the FSA said.
SERPS became the S2P in 2002.
But people who contracted out for a five year period and then opted back in would on average be about £2 a week worse off.
The FSA added that the saving and payment situation for pension savers may change over time.
As for claims that some people had been badly advised to contract out of the pension schemes, the FSA said that it would look to see if mis-selling had occurred. However, the watchdog add that relatively few complaints about mis-selling had been made to the Financial Ombudsman Service (FOS).

Over 12 months on nothing has come from it. In that period many pension funds have grown by 15% which is well over the critical yield needed for contracting out to be better. There is a report due soon from the FSA with an update though. However there are a couple of points in particular that they have made public which could scupper most claims:

1 - time-bars;
2 - whether advisers were under an obligation to give ongoing advice
3 - applying the regulatory position that was in place at the time the contracting out decision was made and not using today's higher standards.

If you have been written to for the last 5 years asking if you want to contract in or out and you should seek advice before deciding but chose to do nothing, then the time bar could apply.

Most advisers terms of business contracts state that the advice is based on the position of the individual at that time and that changes in the future should have the client contacting the adviser. They state that it will not provide an ongoing service.

Regulatory standards today are higher and whilst documentation from 1988 would be awful by todays standards, that was the way it was. It has started to creep in with endowment reviews with the ombudsman now accepting that with profits was genuinely considered low risk in the 80s and 90s and its only recent times when that view changed. How do you think they will view the fact that the Govt was telling people to contract out and get their extra 1% for doing do?

Also in 1996, the SIB (what is now the FSA) stated that people were generally better off for contracting out than contracting in. So many firms could easily state that the regulator at the time was satisfied that it was better to contract out. So, you have the Govt in 1988 saying it and the Govt (SIB is effectively the Govt) saying it again in 1996.

You may have a valid claim or not. However, you havent given any reason for you thinking that you have been mis-sold and what the grounds for your complaint may me.

Please advise where I can find these better investments?? Can you name names/companies where to go?

I could do but I am not as you may sue me.

bobi22

Ok.

But what grounds are your complaint going to be? You cant complain because you think you may be better off if you had stayed contracted in because an ambulance chaser said it was no win no fee. You have to state why you believe you were mis-sold

All I had to do was answer set questions asked by this company - they decided from my answers that they could make a good basis of a claim.

But hey, as I keep saying - if they lose, I dont lose; I just don't gain.

Why did you contract in this year? Why didnt you contract in last year or any of the previous years when NPI wrote to you asking you if you wanted to remain contracted out or not? Copies of those letters will be made available to support the fact that you choose to remain contracted in after being given the choice.

Actually, I have just looked at all my past statements from NPI & I cannot see anywhere on these statements anything to the effect about asking me if I want to opt back in.
The first indication (according to my records) that anything was going awry was the end of year 2004 (dated march 2005) statement that said they may be thinking of closing the scheme at the end of that year. (end of 2005)
I then received a letter january o6 stating that "it was in my best interests to contract me back into the statescheme for the 2005/2006 tax year.& going foreward"

I received confirmation from inland revenue NI office in March this year.
I work away at sea & dont always get to see any correspondance for months on end.
I tend not to throw anything out so I will delve a bit deeper - just in case I have missed something.

Replace my comments on early retirement then with those on later retirement. You can defer the contracted out pot until later as well

OK

However there are a couple of points in particular that they have made public which could scupper most claims:

1 - time-bars;
2 - whether advisers were under an obligation to give ongoing advice
3 - applying the regulatory position that was in place at the time the contracting out decision was made and not using today's higher standards.

1. I feel I am still within the three year limit.
2. Never saw the advisor again?
3. nothing I can do about that so "Ces't la Vie"

Because it costs money for everyone involved. Including you in the long run. Children wont be able to play in playgrounds, trees get cut down, hospitals wont undertake operations where there is some risk. It is easier for people to sue now with no consequences if they dont win.

I agree in "Principal" -but its not your money, is it!


As it stands, I dont know if i am just getting a bit jaded, but your overall stance is, at least making me think you may be right. I certainly intend changing the NPI policy to a better product soon!
My only point now is - if they (the ambulance chasers) want to have a go on my behalf, why not let them?

I think we may have come to some impasse here but I still would like some "General" advice on what I should be looking for as an alternative to the NPI product.

Just something on the lines of :-
where on the net to start looking?
What are reasonable fees/commisions that I should be looking at?
should I be looking at "With profits" or "unit trusts"?

anything really; i'm getting desparate now

Anyway, just like to thank you for your input.

regards,

ps. I've never sued anyone in my life YET;)

dunstonh

But hey, as I keep saying - if they lose, I dont lose; I just don't gain.

Other people do though. If you complain and it goes to ombudsman and they do not uphold it, the adviser you are complaining about is looking at a fee around £400 for your complaint.

I agree in "Principal" -but its not your money, is it!

It could well end up being my money. If the advising firm is no longer in business then it could end up with the FSCS. I pay towards that. I also pay towards the ombudsman as well.

ps. I've never sued anyone in my life YET;)

That is effectively what you are doing when you put a complaint in.

Actually, I have just looked at all my past statements from NPI & I cannot see anywhere on these statements anything to the effect about asking me if I want to opt back in.

They didnt put it on the statements. They were in a letter issued around February time. Most companies have been issuing these for over 3 years (hence time bar possibility).

Heres another thought, lets say they do get the complaint upheld and the insurance company pay £10k redress into your plan to give you an extra £2.50 a week in retirement. You will have to pay 11% plus 17.5% VAT which is £1292.50 now. That means it would take you 10 years to recover your costs before you see a profit in retirement.

where on the net to start looking?
What are reasonable fees/commisions that I should be looking at?
should I be looking at "With profits" or "unit trusts"?

It is an investment. It hasnt been treated like one, partly as AMP destroyed NPI and partly due to your investment inexperience. Its time to treat it like an investment.

There are a number of pension options and a massive range of funds and areas to invest in offering greater potential. It will take you a long time to research from where you are now. You could read some of the recent threads to get some ideas if you think you are up for it. Alternatively a pension and investment specialist IFA is another option.

shiredeon

I don't know if it was just my particular circumstances but my opted out fund is 50k which seems good to me, particularly when you don't know what the future holds and GB could change the rules, i've now opted back in due to my age (50) and popular opinion.

SMARTY29A_2

i think i contracted out of SERPS, so please advise as i know very little about pensions etc so does this mean when i am 60 i get the state pension too?

EdInvestor

A few facts:

There are 2 state pensions, the basic state pension (the same for everyone who has the minimum contributions) and the earnings-related State Second pension( S2P formerly SERPS).There is also a forerunner of SERPS called Graduated pension which people who worked before 1978 when SERPS started will also get, but it's small.

From 1978 when SERPS started you could contract out if it, into an occupational pension (usually final salary) and if you did that, you will receive that part of your SERPS money as part of your company pension when you retire.

From 1988 you could also contract out into a private pension and if you did that you will receive that part of your SERPS money as a separtae pension from the insurance company (or whichever provider you eventually buy an annuity/drawdown from).

Thus the S2P/SERPS portion of many people's state pensions is likely to be split up into several bits, arriving partly as part of the state pension payment ( covering periods when contracted in) partly as a private pension and partly as a segment of any company pensions into which the individual was contracted out for a period.

This complexity makes me wonder how on earth it is going to be possible for anyone to work out if a person has made a loss through being contracted out, except in the most vague terms.

However, posters should perhaps start by getting a state pension forecast here so they at least know how much of the SERPS entitlement will be coming in their state pension.

Working out how much will be arriving in other forms and whether or not it's less or more than what would have arrived if the person had been contracted in throughout, might prove to be somewhat of a challenge.

Note BTW that the maximum S2P/Serps pension you can get is around 120 quid a week, on top of the basic state pension, for a total of around 205 pw. That amount would be received by a person contracted in from 1978 onwards with no gaps, a full state pension record and a reasonable (though not necessarily stellar) salary for the best 20 years of his/her career.

bobi22

Other people do though. If you complain and it goes to ombudsman and they do not uphold it, the adviser you are complaining about is looking at a fee around £400 for your complaint

If per chance I WAS poorly advised/miss sold, I think that the salesman/advisor being £400 worse off is nothing to the amount I may be worse off. Don't you?

It could well end up being my money. If the advising firm is no longer in business then it could end up with the FSCS. I pay towards that. I also pay towards the ombudsman as well.

Arn't these things to be expected in your line of work? Don't you factor these things in when charging people?
Why is there a need at all for the FSCS & the ombudsman?

I havent done YET though, have I?;)

They didnt put it on the statements. They were in a letter issued around February time. Most companies have been issuing these for over 3 years (hence time bar possibility).

Luckily I keep everything!, letters, statements, even the envelopes & as I stated, the first indication was march 2005 (the 3rd of march actually) - still well within the time bar? (3 years?)

Heres another thought, lets say they do get the complaint upheld and the insurance company pay £10k redress into your plan to give you an extra £2.50 a week in retirement. You will have to pay 11% plus 17.5% VAT which is £1292.50 now. That means it would take you 10 years to recover your costs before you see a profit in retirement

I plan to live long & prosper!:D

It will take you a long time to research from where you are now. You could read some of the recent threads to get some ideas if you think you are up for it. Alternatively a pension and investment specialist IFA is another option.

1. I am patient & will make the time!

2. I think that this may well be the crux of the matter - you see, I have always taken advice from financial "specialists."
Sometimes I have paid for their services up front & sometimes I have gone down the commision route.
Once I even paid up front & STILL ended up paying commission as well! (until I found out!!!)
what seems common amongst all this is that all the various "specialists" have made money out of me - but I cannot for the life of me, see any one area that I have greatly benefitted from "their" experience."

Every time I get a firm involved in an overview of my circumstances, all they appear to try & do is :-
1. take over the servicing of my plans. (do they earn commission from this?)
2. Sell me something new.
3. Tell me that the last Financial service firm were a bunch of crooks/inept/wrong/nice but dim/I could go on! But that they "Will look after me"! (And then try & sell me something new!
4. Tell me that the last firm were "Greeeeeeat" & then try & change my plan for "something" better. (that means - selling me something new!)

The only other constant in all this seems to be the fact that I never hear from them again. (unless I phone them?) Why cant they contact me without trying to sell me something new?
The last firm of IFA's (and they were IFA's) phoned me about six times in a few months about two years ago - asking if I wanted a "Free Financial overview!" - I had only just finished having one? from them! - Which I would explain - only to receive yet another phone call a few weeks later - quote " as you are on our mailing list, would you like a free financial overview?!!"

My biggest problem at the moment is one of trust.
Who can I trust?
I am beginning to see why Edinvestor has the signature "no one looks after your money like you!"

Sorry for the rant by the way - I cant even say i feel better!!:mad: