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Opt out of SERPS/S2P?

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  • jamesd
    jamesd Posts: 26,103 Forumite
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    Do you have any potential desire to retire between ages 55 and 67? If the answer is yes then only contracting out again will get you the money into a pension pot that allows you to take it in that age range. You might or might not get as much retirement income out of it (almost certainly won't at the beginning of the range) but having the income when you need it beats not having the income. If you did wait until state retirement age then you'd probably do about as well or only a little worse, depending on how the investments go, so there's no great loss from being contracted out.

    That was enough to cause me to contract out for a maximum of four years a year and a bit ago: I will be taking the income before I get to state pension age.

    Different picture for someone much older than their mid 40s, perhaps, but even there considering when the income will be needed is important.
  • s-a-h-
    s-a-h- Posts: 233 Forumite
    I will be waiting until state retirement age so staying in seems the answer. Could you explain how contracting out is better if retiring in one's late 50's.
    Also, if I was contracting out again, how would I go about doing this, would I restart with my old personal pension or would I be able to opt out elsewhere?
  • jamesd
    jamesd Posts: 26,103 Forumite
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    You can take income from a personal pension from age 55. For contracted in money you can't get any of it until state pension age.

    You'd compare the terms of your old pension to modern ones and see how the charges compare. It's likely that a new pension would be the cheapest way to go. It may not be possible to restart the old one, you'd have to ask that pension provider.
  • s-a-h-
    s-a-h- Posts: 233 Forumite
    Thanks very much dunstonh and jamesd, you have both made things a lot clearer.
  • maria6259
    maria6259 Posts: 180 Forumite
    Can anyone tell me how to find out if I am contracted out of SERPS (S2P), and if so, am I then not entitled to the additional state pension?
    Thanks
    If you want to go fast, go alone
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  • jamesd
    jamesd Posts: 26,103 Forumite
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    One easy way is to get a State Pension Forecast. That will tell you whether you are contracted in or out and it will also get you the useful forecast.

    You will get some additional state pension for any years where you have worked and were not contracted out. Also because contracting out is expected to end in two years you will accumulate additional state pension for any years worked after that.

    Contracting out only affects the years when you are contracted out. Money from years before and after contracting out still goes to the additional state pension. Money that you have had paid to a personal or work pension from contracting out stays in that pension even if you contract back in.
  • maria6259 wrote: »
    Can anyone tell me how to find out if I am contracted out of SERPS (S2P), and if so, am I then not entitled to the additional state pension?
    Thanks

    You will get the Pension you opted out into, instead.
    (AKA HRH_MUngo)
    Member #10 of £2 savers club
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  • Paul_Herring
    Paul_Herring Posts: 7,484 Forumite
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    maria6259 wrote: »
    Can anyone tell me how to find out if I am contracted out of SERPS (S2P)
    As pointed out, get a forecast.
    and if so, am I then not entitled to the additional state pension?
    Depends on if you've paid any S2P. I contracted out back around 2000 - I have about 6 quid's worth of S2P from the years I hadn't opted out of (up to 2000), with the rest of the rebates since lying in my pension fund due to pay whatever they're going to pay when it comes to commute my pension.
    Conjugating the verb 'to be":
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  • maria6259
    maria6259 Posts: 180 Forumite
    Thanks for all your replies.
    I have done the forecast which says (as of 5th April 2009):
    basic pension £97.65
    payable additional pension £39.50

    I pay into a company pension now and have done for 9 years. I have been working for 33 years, some of which were self employed. Will I still get the additional pension?

    I am trying to plan for retirement, which is still 13 years off (not yet counting the days!) but want to ensure I have enough to live on.
    If you want to go fast, go alone
    If you want to go far, go with friends
  • dunstonh
    dunstonh Posts: 119,820 Forumite
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    I pay into a company pension now and have done for 9 years. I have been working for 33 years, some of which were self employed. Will I still get the additional pension?

    You will get the second state pension accrued to date. You didnt qualify for any during your period of self employment. You may not be qualifying for any more now if your pension is contracted out. However, you will be if it is contracted in.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
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