Opt out of SERPS/S2P?

jamesd

EdInvestor, that's really off topic here and might result in a longer discussion than desirable here, so please see my reply in the new topic Suggesting vendors, services and products.

dunstonh

I am about (just). I had a compliance inspection this week and that has put me behind on just about everything. Priorty goes to paying clients.

I do need to point out that the questionnaire is a risk profiler. It isnt a questionnaire to help you decide if you should contract in or out. I do have a report on that which can help you make your own mind up as it shows pros and cons of contracting in/out but it wont make the decision for you.

Keen_Saver

Hi Dunston,

I sent through an email to you, there's no rush, whenever you get a chance, thanks

Wiggynut

when I was 17 (1988) I started a pension and was advised to opt out.. a couple of years ago I was told to opt back in! I have no idea what's going on and did I do the right thing.
Plus, I don't add anything to this pension as I made a couple of premiums then due to circumstances forgot all about it! so does it make any difference that I've opted out all those years??? I really don't understand pensions at all and I don't trust them... hence why I don't make any payments (and also skint!) just wondering.
any one translate complicated stuff to a dumbo?

jamesd

Wiggynut, you appear to have done the things which were best for most people at the time you did them.

Where is the pension money now? One of the keys to doing well with a pension is having good investments inside the pension plan, so you can look at that and see if you can improve that part.

brightonbabe_3

I opted out of serps in the early nineties (on advise from the pension adviser/salesman), It turns out that it was the worst thing I could have done, and lost a considerable amount from my pension. Recently I have had 2 calls from seperate companies saying that I have a good case to claim compensation for being miss-sold this pension and to get the amount I lost through opting out, back, estimated £5K+. Obviously they charge a fee , £500 in both cases plus a percentage of either 12% or 15%. Not bad business!

Has anyone else gone through the compensation route? I understand it is quite new so would appreciate some advice.

jamesd

brightonbabe, I suggest waiting until later this month. The FSA will be releasing a step by step guide to help people determine if there may have been a mis-sale. It's pointless to agree to pay anything to anyone before the FSA guidance is given.

If you haven't retired yet it seems unlikely that it will be a potential mis-sale, because it's likely that you were within the age ranges where it was usually best to opt out, given decent investment performance.

Some good reasons to opt out even outside the age ranges that used to be used include, according to that FSA page, with some comments added by me:

• For a person expecting to stay single
  • Higher pension potential because they don't have to provide for a spouse, while that's mandatory when contracting in.
  • Get a pension for a partner they aren't married to, perhaps because marriage was illegal for them or for personal reasons.
  • Get pension paid to estate if they die before taking it.
• To get more control over investments.
• To get a higher investment risk and growth potential than in the state pension.
• To take the pension early, before state retirement age, after 1990.

It sounds as though you've been called by two of the claims firms that make their money by charging you a fee regardless of whether a claim is successful or charge you a cash fee of a fixed amount even if the redress is a pound and their fee is a few hundred pounds. Any redress goes into the pension. For them it's a numbers game: con lots of people into signing up with bogus claims about them getting lots of money and profit from the few who end up with a successful claim, plus anyone daft enough to agree to a fixed fee regardless of result based on a cold call knowing nothing about them.

My advice is simple enough: if a financial services firm phones you out of the blue, ignore them because they just proved that they aren't a company it's worth doing business with. Most financial services firms are prohibited from cold calling.

dunstonh

opted out of serps in the early nineties (on advise from the pension adviser/salesman), It turns out that it was the worst thing I could have done, and lost a considerable amount from my pension

How do you know you have lost a considerable amount from your pension. Current info shows around 50% are worse/better off by contracting out. Many of those worse off are still prepared to do it as it's a short term loss or they want the benefits of contracting out which are not offered with contracting in. Of those worse off, the average amount is £7 a week which is nothing really.

Recently I have had 2 calls from seperate companies saying that I have a good case to claim compensation for being miss-sold this pension and to get the amount I lost through opting out, back, estimated £5K+. Obviously they charge a fee , £500 in both cases plus a percentage of either 12% or 15%. Not bad business!

There is a couple of dodgy companies phoning round telling people they have been mis-sold without knowing a single bit of information. Avoid them.

brightonbabe_3

Thanks for that.
Both companies told me I had lost at least £500 every year that I had opted out (10 yrs). I presumed this to be true as all pensions seem to have struggled throughout that decade. Don't think I shall be parting with another £500 for their fee!.....Thanks again;)

jamesd

Well, once certainty: if they said that you had lost 500 a year without first asking you about your investments and earnings or pension value, they were just inventing numbers. What the FSA said is that "The average underperformance for individuals over the pivotal age when they contracted out is estimated to be £7 per week" and that's only 364 a year. They also said that "improved investment performance since 2005, together with actual and proposed changes in government pension policy, have substantially reduced the median underperformance for all contracted out individuals".

As usual in this, the fuss started at a time when the markets were at a low point and things looked their worst. Now we're back to more the long-term average and the picture is looking more reasonable.

For your future, assuming you're still invested, picking good investments, possibly moving pension provider to do it, is the way to go. Lots of poor pension plans out there that people can switch away from.