Opt out of SERPS/S2P?

EdInvestor

There are two state pensions, the basic and the state second pension (S2P formerly SERPS).You contract out of the second one, not the first one.

It is probable that when you left your last company that they contracted you back in to S2P, in which case you need to do nothing when you start work again. Check with the Pension Service whether you are currently contracted in or out ( it's irelevant at the moment as you are not working).

Contracting out into personal (as opposed to occupational) pensions will be abolished from 2012, so it's probably not worth bothering to set up a special pension to receive the NI rebates for just a short time.Depending on your age, you may be better off in S2P anyway.If you join a new contracted out company scheme, they will arrange things automatically.

dunstonh

When I find a permanent job what do I need to do about a pension?

Think of it more as retirement provision rather than getting a pension. You take out the best options to suit what you are after. There is no one-size-fits-all solution.

Get a private one through an IFA or go with the company pension if they have one?

You cannot make that decision until you know what is available. You could have access to a good final salary scheme or just a hollow group stakeholder with no employer contributions.

Also should I (can I) opt back in?

As Ed says, you already are. You have to be employed to be contracted out.

I have 19 years left before retirement age.

Which would make your state retirement age 66. Are you sure its 19 or 20. (most people dont realise that state pension age is going up.

HH62

I think my retirement age is 66 , and I'll be 47 in January . Keep forgetting how old I am, which must be a sign of old age

Thanks to both of you - you've answered my questions well.

mbailey

I am looking to contract out of S2P but I am unsure how to actually do this and what forms to fill up?

dunstonh

mbailey wrote: »

I am looking to contract out of S2P but I am unsure how to actually do this and what forms to fill up?

Either ask your IFA or your pension provider. Not all pension plans allow it. You only have a couple of years left to contract out so it may not be worth it if it involves setting up a new plan.

mbailey

dunstonh wrote: »

Either ask your IFA or your pension provider. Not all pension plans allow it. You only have a couple of years left to contract out so it may not be worth it if it involves setting up a new plan.

Unfortunately my current "contracted out" final salary scheme has just ended and we are moving to a "contracted in" new Stakeholder defined contribution scheme.

For the new scheme we have been told by the company that we have the option to contract back out again if we want to, with a proportion of the extra NI being paid into my Stakeholder scheme at some point in the future. Yes I have read this will be stopped from 2012.

I have also read on here that the general recommendation is based on your age, and as I am only 34 the advice seems to be to contract out rather than contract in.

dunstonh

I have also read on here that the general recommendation is based on your age, and as I am only 34 the advice seems to be to contract out rather than contract in.

If I had the choice, i would contract out. However, its not as easy as that. I prefer a bird in the hand and not two in the bush that the Govt keep pruning. However, others may prefer the Govt looking after it. The option to take 25% lump sum when contracting out doesnt exist with contracting in. Also, contracting in matches your state retirement age. Contracting out can be earlier or later at your choice (within a 55-75 band).

Your group scheme may have the option to contract out and you should check there first.

hullkittycat1981

deemy2004 wrote: »

I'm going with the flow , stocks are going up so I'm continuing to pile in....


Though if I think about it, the future looks bleak for stocks !! Ageing population, rising energy costs, global warming disasters, Americans printng dollars like there is no tomorrow, one day there will be a day of reckoning and on that day there will be a humungous credit squeeze etc....

Wow you must have had a crystal ball..... that is from 2005!

pam1952_2

Hi

About 20 year ago I was advised to 'contract out' which I did I haven't paid anything into the scheme since I joined. I am now 56 and retire when I am 62 should I contract back into the government scheme.

Thanks
Pam

dunstonh

I am now 56 and retire when I am 62 should I contract back into the government scheme.

Between the ages of 40 and 45 is the right time to contract back in. So, yes would be your answer.