Opt out of SERPS/S2P?

FloAnna

dunstonh wrote:

It doesnt worry me personally as I pre-issue my reports and they are heavily detailed and areas like this will have a full pros and cons section. Although, no doubt I will get stung on the FSCS levys for those that havent.

The main point was to raise it as a discussion point again as we have had a few contracting out posts recently. The whole thing on contracting in/out is just not clear cut and there is so little guidence from anyone.

FSAVC are classed as that anymore they are classed and have the same rules as normal personnal pensions so just be very carefull and if 50 or under opt back in no dout!!!!

FloAnna

Just to let everyone know that if u took a pension out with Lauertain Life, Liberty Life, Cannon, triderte life these companies have all been taken over by a company called Lincoln Life and Pension who are now in gloucester

FloAnna

Rubyloo wrote:

I wonder if anyone can answer a few questions for me!
I was contracted out of serps by Abbey Life back in 87 & was advised by them to contract in last year which I did, I was cold called by a company Called Tekram Goldberg who have told me that I can claim compensation from Abbey Life as I was miss sold the policy! They want £500 up front & say they will charge 12% plus VAT once I get compensation. They think that I should get around £13.000 back............does this sound right? I know nothing about pensions, state or private so I am now very confused indeed! I haven't £500 spare cash as I don't work at present as I have a young family but obviously want to claim back the money if is due to me.
Has anyone heard of this company or delt with them? Can I claim the compensation back myself? Where do I start?
I feel really thick.........Hope somebody can help!
Thanks in advance
:beer:

i hate company who do this.. u can complain yrself and get all the money back all they will do is wot u can do and thats call the abbey life make a miss selling complaint get a questionaire to fill in and then wait for the company to come back to u within 6 weeks if u r not happy with there answer u have 6 nths to go to the FOS and they will look into it again. DONT GO TO A 3RD PARTY JUST TO GET THEN TO TAKE HALF YR MONEY

dunstonh

FSAVC are classed as that anymore they are classed and have the same rules as normal personnal pensions so just be very carefull and if 50 or under opt back in no dout!!!!

The FSCS and FSAVCs are two different things.

I've just read some of the comments from EdInvertor and i think that the advise he is giving u bout this not being bad advise is rubbish,, i think if u do not know who yr pension company is then u have been miss informed and should complain.

I dont know what part of the thread you are referring to but if someone isnt able to identify their own pension company then that is their own fault and no-one elses. There are policy documents issued which say they should be kept safe, statements, direct debits going out etc. What else does that person need? Probably nothing as they have forgotten where they parked the car and where they live.

i hate company who do this.. u can complain yrself and get all the money back all they will do is wot u can do and thats call the abbey life make a miss selling complaint get a questionaire to fill in and then wait for the company to come back to u within 6 weeks if u r not happy with there answer u have 6 nths to go to the FOS and they will look into it again. DONT GO TO A 3RD PARTY JUST TO GET THEN TO TAKE HALF YR MONEY

The sentiment is correct but you are not able to get access to any of the money. If a complaint on pensions is upheld, the redress is dealt with within pensions. Not cash in your pocket.

Paul_Herring

FloAnna wrote:

I work for an Life and Pensions company and we arent allowed to give people advise but everything i know and we all talk about we know that anyone 50 or below should opt back in to S2P.

You have (at the time of writing) 7 posts and have answered in quick succession a few posts on this thread - you appear to be a new member. Excuse my bluntness:

Why should I, a 34 yr old, opt back in, and have my NI contributions paid to the government to pay for a pension (S2P) that, at the moment is speculatively going to be withdrawn when the two pensions may be merged, when I can have the rebates paid to my own pension and are under "my control."

1) If the gubment do abandon S2P and increase the state pension, my non-rebated NI contributions are effectively going to waste (they could have gone into my pension for no cost instead)

2) With the recent gross changes to the state pension scheme, what guarantee do I have that my non-rebated contributions will give me more than they would in a personal pension scheme. When answering, please bear in mind that there is currently (at the moment) another (at least) 31 years before I claim a state pension.

3) What assumptions are being made by your employers that *everyone* under 50 should be opting back in? Please discount a future possibility of being sued for bad advice since forcing either option (opt-in/opt-out) is a potential opportunity for a future claim of "bad advice".

deadparrot

Paul_Herring wrote:

Why should I, a 34 yr old, opt back in, and have my NI contributions paid to the government to pay for a pension (S2P) that, at the moment is speculatively going to be withdrawn when the two pensions may be merged, when I can have the rebates paid to my own pension and are under "my control."

1) If the gubment do abandon S2P and increase the state pension, my non-rebated NI contributions are effectively going to waste (they could have gone into my pension for no cost instead)

2) With the recent gross changes to the state pension scheme, what guarantee do I have that my non-rebated contributions will give me more than they would in a personal pension scheme. When answering, please bear in mind that there is currently (at the moment) another (at least) 31 years before I claim a state pension.

precisely why I have just contracted out, wish I'd done it years ago now. The risk of government changes to S2P out weight the risk of a small income reduction by opting out.

jamesd

FloAnna wrote:

I work for an Life and Pensions company and we arent allowed to give people advise but everything i know and we all talk about we know that anyone 50 or below should opt back in to S2P.

Take a male in his early 40s who can just get 30 years counting to the state pension if he works in the UK for every year until he's 65, has no significant existing S2P/SERPS fund and is now earning above the upper earnings limit. The person's investment risk profile is near the high end of the scale. Is this person most likely to be better off when contracted in or when contracted out? Why?

Andy_L

FloAnna wrote:

I work for an Life and Pensions company and we arent allowed to give people advise but everything i know and we all talk about we know that anyone 50 or below should opt back in to S2P.

I think i'll pile into this new game.

I'm 35 & contracted out - according to you I should opt back in. However to do that I'd have to leave my contracted out final salary scheme. Still think anyone 50 or below should opt back in to S2P

EdInvestor

FloAnna wrote:

I've just read some of the comments from EdInvertor and i think that the advise he is giving u bout this not being bad advise is rubbish...

When companies like yours write to their customers to advise them to contract back into S2P, what do they suggest should be done with the contributions sitting in the remaining fund?

Do they explain how the money is now often in zombie funds and will not grow?Do they point out how the high charges on these old contracts will eat away at the fund, especially with no more money coming in?

Or do they say nothing, because it is quite likely that many unsuspecting customers will think that ALL their money has now gone back into the state scheme, so they will get the full S2P when they retire?

Not that the contracted out money will stay contracted out forever, in the mouldy old pension at the lifeco, producing something verging on the worthless when they retire.

That's the point at which we're going to get pensions misselling drama No 2. Probably from about 2020 onwards.....

dunstonh

With contracting out being beneficial to a number of people (not just higher risk investors), there have been concerns that bulk contracting in could be just as damaging to some as contracting out is to others.

When companies like yours write to their customers to advise them to contract back into S2P, what do they suggest should be done with the contributions sitting in the remaining fund?

They arent allowed to. That comes under advice.

Do they explain how the money is now often in zombie funds and will not grow?Do they point out how the high charges on these old contracts will eat away at the fund, especially with no more money coming in?

Again, they arent allowed to. To be fair to NU (as that is the company in question here), they do allow free switches to unit linked funds so its not as if information and options are not available.

Or do they say nothing, because it is quite likely that many unsuspecting customers will think that ALL their money has now gone back into the state scheme, so they will get the full S2P when they retire?

I have seen a few of these letters from the companies and you cannot make that misunderstanding from the content.

Not that the contracted out money will stay contracted out forever, in the mouldy old pension at the lifeco, producing something verging on the worthless when they retire.

Thats too big a generalisation. Any half decent invested fund could easily provide more than the state equivalent. Contracted out funds were better off before the stockmarket crash and its quite possible that they will be again in the future.

We often point out that the wrapper is one thing, the investments are another. You can have two identical people with identical circumstances. One invests in decent unit linked funds and the other in a closed WP fund. The UL funds end up paying an amount better than contracting in, the WP an amount less than contracting in. Is the decision to contract out wrong or the investments used?

If the Govt did ever move to a single state pension (which is still a possibility) then everyone who contracted out will be financially better off whether their money is invested in a zombie fund or decent investments.

You would probably find Morgan Green phoning people up telling people to complain if their adviser didnt tell them to contract out if that happens.

That's the point at which we're going to get pensions misselling drama No 2. Probably from about 2020 onwards.....

You cannot complain on investment performance. So no mis-selling there. The FSA currently believe that upto 250,000 people above the pivotal age have contracted out and it is expected reviews on these will be looked out to look for trends. This follows on from the FSA saying in February that it found no evidence of widespread mis-selling in the work done so far.

This is not an nil risk vs a risk issue. Its a situation full of unknowns with both options containing risk and both options have seen reducing benefits over the years. With the average age of contracted out pensions being taken at 63 (for men - I dont know the womens figure), it is clear to see that people are utilising one of the beneifits of contracting out. That is being able to access your pension before state retirement age.