Opt out of SERPS/S2P?

jamesd

If you want to do trading like that then yes, moving the money to a SIPP could be sensible. If you just wanted to use different funds, a switch to a non-SIPP personal pension or SIPP would do the job, with the chance of lower charges in the non-SIPP personal pension. You can take income from any personal pension, SIPP or not, from age 55. Doesn't apply to a workplace scheme because that's not a personal pension.

It's possible that the L&G pension has a guaranteed annuity rate, so check that. If it has one it'll probably be higher than current annuity rates and that could make it better to leave the money where it is - getting say 9% of the capital as annuity income instead of say 6% on the current open market would be quite a difference. Still, with at least 15 years to go before you an take any benefits, there's a fair chance for you to grow the money by more than this.

wannabemoneysaver

Thanks jamesd. Looking at the paperwork, it appears to be a "unitised with profits" fund. There's no mention of any guaranteed rates. I think I'd be better off putting it into 2 or 3 funds. Over 15 or so years, it could turn into something decent, then I could use that to supplement earnings if I wanted to go part-time at 60 or something.

I think I'll wait and see if I get any other opinions on here. I assume if I contact L&G and tell them I want to move they have to send me a cheque?

jamesd

They won't send you a cheque under any circumstances. There would be a large tax penalty for both them and you to pay. You'd sign up with another pension scheme and it would ask them to transfer it to that new scheme. They would send the other scheme a cheque directly.

Two or three funds is less than the fifteen or so an IFA might use but not a bad start anyway.

wannabemoneysaver

Bump for this , sorry. Still undecided. Any opinions would be welcome.Suppose I 'm really looking to get this L+G money up to an amount that will help me through 60 -65 bracket, until my occupational pension kicks in. I'm not gonna get that getting 1-2% pa with L&G , so is it a good idea to put it directly into the market for 20yrs?

jamesd

For 20 years you might consider 25% or more of emerging markets funds as part of the mixture of investments, if you can stand drops of 70% every five years along with the likely higher average growth. I'm not keen on directly into the market if you mean shares, unless you like to watch your selected companies very carefully at all times. I prefer to leave that mostly to fund managers who can do it as a full time job.

KiNeL

Sorry, wrong thread !

Omar1

I have contacted a company via the web to investigate whether I have been advised incorrectly re opting out of SERPS. Now I have been sent a letter to ask me to sign to say they are acting as my agent - in order to get info re my pensions in order to investigate. However, I am not sure if they are legitimate or whether I should be giving them this agent status. They do not charge for the investigation but hope to make money on pension advice based on what they find.

Anyone heard of them serpsreview.co.uk - agent is MK Financial Planning Ltd based in Bristol

Appreciate advice
Thanks

isasmurf wrote: »

Questions about this subject arise all the time, although it's usually whether they should opt back in. So, you're quite unusual and it's a refreshing change (Wasn't that a cider advert?)

With the State Pension you contribute towards your Basic State Pension, and if your an employee you contribute a bit more towards a little extra known as State Second Pension (S2P). S2P replaced SERPS in about 2001. S2P is supposed to be more generous for people on lowish incomes and women compared with SERPS. Whether it is I have no idea.

By opting out of S2P, you are requesting that the government gives you back the money you contributed towards that part of the pension to be re-invested with your private pension. To opt out you ask your pension provider for the forms, fill them and send them back. The government will pay back a percentage of your National Insurance contributions to your private pension in the year after they are made. E.g. You pay National Insurance in 2004-05, the government will pay back a percentage of this sometime during 2005-06 (usually the summer of 2005). The reason for this delay is that they need your employer to send in details of your pay, tax and national insurance payments at the end of the tax year (known as a P14 end of year return). Only when this form has been processed and entered on to the National Insurance Recording System (NIRS2) will the system calculate your National insurance rebate and pay it to your pension provider.

Should you opt out? Well, that's a contenious issue. You'll get replys from the regulars on this board that will say point blank you shouldn't. Also, a number of the major pension providers are recommending that all their members contract back in to S2P. Personally I don't take that view. I think the reason for the general recommendations to contract back in are to do with the extremely complicated formula to calculate your rebate and pension providers don't want to be hit with misselling claims in the future.

Whether you should contract out depends on a number of factors, including your attitude to risk, and what do you think the government will do with State Pensions in the future.

My own personal view (as someone in their late 20s) is that I would rather have the S2P in my pension pot as I know I have got it and I've got at least the next 30 years to recover any losses that it may make in the short term. Plus I don't believe the S2P will exist when I retire.

I'm sorry I can't give any more helpful advice.

KiNeL

I know that in recent years whilst opted out each year when I received my statement it was accompanied by a letter advising me to opt back in to SERPS. I ignored it because I had my reasons for staying out, like retiring early, but if you have been receiving similar letters and similarly ignoring them, then that will likely seriously weaken any possible mis selling claim which you might have.

Remember too that opting out was not necessarily a bad thing to do when the scheme was introduced and it's only the diminishing rebates which have made them poor value and brought them into question.

Personally I'd be very wary of employing a 3rd party outfit to persue a possible claim and I most certainly wouldn't pay anything up front. I might consider it for a percentage of anything they actually got back.

dunstonh

I have contacted a company via the web to investigate whether I have been advised incorrectly re opting out of SERPS.

Did you contact them or did they contact you?

Now I have been sent a letter to ask me to sign to say they are acting as my agent - in order to get info re my pensions in order to investigate.

That is normal for IFAs as companies will only pass information to a servicing agent.

However, I am not sure if they are legitimate or whether I should be giving them this agent status.

If they are FSA authorised then they are legitimate. If they are not FSA authorised then in theory they should not be allowed to have agent status.

They do not charge for the investigation but hope to make money on pension advice based on what they find.

Whilst it isnt a scam, it is a bit on the dodgy side when it comes to misrepresentation.

The FSA did a review of contracting out sales and found under 1.5% of sales were mis-sold. The rule of thumb is that if you were under 43 at the point of contracting out then you were not mis-sold. The FSA have a guide on this with a flow chart. There is no need to use a claims company or a firm trying to take money off you by other means.

What this firm appear to be doing is using the "mis-sale" excuse to find out the information and they will then come back to you and tell you that you were not mis-sold (unless you are in the 1.5%) and will then tell you that a modern personal pension or stakeholder plan will be cheaper. They will then earn around 5% of the fund value.

[TEXT DELETED BY FORUM TEAM].

If you want a pension review then use a local IFA. Dont use claims companies [TEXT DELETED BY FORUM TEAM].

mark55man

Hi - grateful for some advice

I am 47 and have been contracted out (with Scot Wid) from early on. I have been in a final salary scheme (same company) since 1989, but this has recently closed and I am now in the company DC scheme with Std Life

I know I am at (just past) the point where I should contract back in - my question is around what I should do with the just under £50K or so in my pot.

1. Can I transfer it to my current DC scheme as a booster - quite a wide range of funds
2. Can I transfer it to a pension vehicle where I have more control - I see some chat about SIPP but don't know much about that (yet)
3. Should I leave it with where it is - which I am reluctant to do, as I would rather be more aggressive investment-wise (8-12 years) than a large corporate generic fund would manage

For me one benefit of the closure of my FS scheme is that it has opened possibilities for earlier retirement without decimating value of my pension - this is important to me and I would want to maximise this