Opt out of SERPS/S2P?

dunstonh

Jerrycan wrote: »

Hi

I am currently contracted out of S2P ( since 1990 ) and I know that I will be automatically contracted back in next April.My question is this - At the moment I believe I can take 25% of my 'pot' as a lump sum when I retire as I am contracted out. I will not retire for another 10 years. As things currently stand will I still be able to take 25% of my pot when I retire or does this 'entitlement' evaporate when I am automatically contracted back in:question:

Jerrycan

The decision to contract back in/out has no impact on your ability to take 25% from your funds now or later.

Jerrycan_2

Thanks dunstonh

That has put my mind at rest on that one. As you are obviously very knowledgeable about financial matters, another question If I may.
I have a company pension at present ( my/employers contributions ), plus a private pension which I have not paid into since I jointed this company as the rules at the time did not allow it ( due to salary level ). I know that the rules have changed and that I could now contribute to both but the question is - should I restart the dormant pension contributions if I have some spare cash? Obviously I would use up my ISA allowance first, but anything after that - additional pension contributions or easy access savings account at low interest rates?

I would value your opinion / view in principle and also at what point would one of these be a better option than the other ( increase in interest rates ?/ change in government policy on private pensions? )

Many thanks

Jerrycan

dunstonh

should I restart the dormant pension contributions if I have some spare cash? Obviously I would use up my ISA allowance first, but anything after that - additional pension contributions or easy access savings account at low interest rates?

Its a bit specific as there are pros and cons of the various options. Restarting an old plan may not be an option available to you (it could be closed for top up/restart). It may also not be the best option as modern plans may be better and cheaper. Pensions are obviously great for providing income provision (they beat ISA in that respect). However, they are poor at capital provision. If you have a spouse with poor or no pensions then utilising contributions in their name is a good idea as they will have a personal income allowance in retirement to use up which will be wasted if all the income is in your name. (2 people earning 10k each can pay virtually no tax. 1 person earning £20k will pay around £2000 tax).

When you talk ISAs for long term planning, you should be looking at S&S ISAs rather than cash. Cash ISAs are either suited to the cash element of your portfolio or for short term needs.

freeasabird

I've only just looked at the opt in form that the Prudential sent me and I suspect it's not worth contracting in back in again especially when:

Contracting out will finish in 2012.

I've been made redundant and I've not paid contracted out contributions since 2010.

I'll be 49 soon and I'm a single woman so no spouse to consider.

I opted out in in the eighties but didn't always keep up my payments in the Prudential scheme for various reasons (including being a student) for several years.

I have a company scheme that I paid into for over a decade.

The current value of the Prudential pension is £25,000 so I need to sort it out but I believe my focus should be on considering whether to put money into the Prudential pension (I've checked they will accept payments), transfer it to my company pension scheme or transfer the company pension to the Prudential.

Major decisions that I will consult a fiancial adviser about so that's my priority rather than contracting back in for one year. Am I right?

dunstonh

Major decisions that I will consult a fiancial adviser about so that's my priority rather than contracting back in for one year. Am I right?

Yes. Dont worry about it for 1 year. The decision to contract in/out for the last year is only going to impact on you by pence. Plus, you have to be paying class 1 NI for it to make any difference and you are not.

freeasabird

dunstonh wrote: »

Yes. Dont worry about it for 1 year. The decision to contract in/out for the last year is only going to impact on you by pence. Plus, you have to be paying class 1 NI for it to make any difference and you are not.

Thank you.

fishhawks

As part of a scheme in a previous job I contracted out into an Equitable life personal pension plan, I probably should have done something with this before now, particularly when its with Equitable, but didnt know what to do so did nothing.

I have just had my annual statement saying that when I retire I will get £52 per month. Dont know if I should stay where I am, opt back in or move to another company.

I have a pension via my current employment but I am leaving this job in July so will need to move that also, but can look at that nearer the time?

I would really appreciate some advice.
Many thanks

dunstonh

I have just had my annual statement saying that when I retire I will get £52 per month. Dont know if I should stay where I am, opt back in or move to another company.

Its probably a bit late now. The deadline for most companies for the final year of contracting out is today.

I have just had my annual statement saying that when I retire I will get £52 per month.

That seems low for a long time contract out period. It is possible that you are not contracted out any more or your current employment pension takes priority over this old one (e.g. if the new one is contracted out or is a defined benefit scheme).

fishhawks

Thanks dunstonh, My statement shows that the growth for last year was £580.79, so not sure if I am still in our whether this has changed. I will try to find out.

dunstonh

fishhawks wrote: »

Thanks dunstonh, My statement shows that the growth for last year was £580.79, so not sure if I am still in our whether this has changed. I will try to find out.

Was a rebate added to the pension? if not, then you are not contracted out (or at least not actively).