Opt out of SERPS/S2P?

catzeyes79

Hi,
Well as per usual it appears there is more than one way of skinning a rabbit and nobody has the defibative answer.
However, My question on the subject is:

If I had a private company pension withn AXA and contracted out of SERPS, then subsiquently left that company, what will happen to my SERPS. Will it be added to the company pension with AXA or not. Am I missing out as I now work for the goverment and have a classic pension(don't ask, I could tell you but then i would have to kill you.......due to shame).

Cheers

Dunstonh did you get my e-mail address

dunstonh

If I had a private company pension withn AXA and contracted out of SERPS, then subsiquently left that company, what will happen to my SERPS. Will it be added to the company pension with AXA or not. Am I missing out as I now work for the goverment and have a classic pension(don't ask, I could tell you but then i would have to kill you.......due to shame).

As you are in the classic scheme, no more money is being added to the AXA one. However, if you were ever to leave the classic scheme, you would instantly contract back out again unless you have told AXA otherwise.

The funds with AXA are still growing (in theory. Please do not say that they are in the AXA with profits fund).

Dunstonh did you get my e-mail address

Yes thanks. Sent you an email about 5 mins ago

catzeyes79

I honestly could not tell you which AXA penson it was with......DOH!
So what is happening to my SERPS. Is the money going to my state pension. If not then sure I am loosing both ways. i am not gonna get a full state pension as they have already told me my contibution sare too low and now I could still not be contributing to either my state pension or private pension. Or as per usual have i simplifed everything too much.......which is what my wife tells me when I say i don't understand women.

D

dunstonh

Basically, you have the basic state pension and then on top of that you have graduated pension, SERPS and S2P. Each of those are adds on which you may or may not have.

So, in your case, it is incremental to the state pension entitlement.

Or as per usual have i simplifed everything too much.......which is what my wife tells me when I say i don't understand women.

Not sure which is more complicated. Women or pensions...

I honestly could not tell you which AXA penson it was with......DOH!

Its worth finding out. Take a look at your last statement and see what investment fund(s) you are in.

tim158

Hi just reading the post about s2p, because i have come across a statement for my wife refering to this (winsor life).

My wife has not been working for the last 10 years and on and off claiming IB and DLA due to illnesses (she has worked aprox 12 years before that). Upon reading her statement for the s2p it says she will only get £250.00 per year.

This statement is also in her maiden name (be married 9 years now) so we need to address that.

So is there a helpline number i can contact to find out what is best to do with this s2p police or should i talk to the IB or DLA office or the provider of the s2p policy (winsor life).

I myself have a penson once i have complete 22years in the RAF, so i have not alot of experiance with pensions.

Thanks for any advice

Milarky

tim158 wrote:

So is there a helpline number i can contact to find out what is best to do with this s2p police or should i talk to the IB or DLA office or the provider of the s2p policy (winsor life)

You mean "policy" surely?

But in answer look here:

http://www.thisismoney.co.uk/help-and-advice/advice-banks/article.html?in_advicepage_id=125&in_article_id=395454

Qualifying for S2P

Anyone employed by a company and earning more than the National Insurance Lower Earnings Limit of £4,108 a year in the 2004/05 tax year. Also, certain carers and those who can't work through illness or disability will be treated as though they were earning £11,600 a year - but to qualify they must meet certain conditions.

As a carer, you need to be looking after a child under six and claiming child benefit; or be looking after an ill or disabled person and be eligible for Home Responsibilities Protection; or be entitled to Invalid Care Allowance.

Criteria for the long-term disabled are being entitled to long-term Incapacity Benefit or Severe Disablement Allowance; and, on reaching pensionable age, to have worked and paid Class 1 NICs, or to be treated as having done so, for at least one tenth of your working life since 1978.

As under Serps, both the self-employed and unemployed are excluded.

From this you can see how your wife qualifies for the basic level of S2P - which is in addition to qualifying for the basic state pension. [Please note that figures given there are a year out-of-date]

However I think you are confusing 'contracting out' [or back in] of S2P with eligibilty to S2P - which is what your wife has by virtue of being incapable of work under IB and DLA.

S2P 'rebates' [aka 'the minimum contribution'] were and are based on annual earnings. Since your wife has none at present she won't recieve any kind of rebate [which I assume use to go to winsor life when she was working, yes?]

Under SERPS, that would have been that - no earnings, no rebate. But under S2P, cover has been extended to certain groups - including those unable to work. The system 'assumes' everone in it has a minmimum level of income [about 12k] but you can ONLY receive credit for this by way of entitlement to S2P not by way of a rebate if you don't have the level of earnings [or any earnings] being assumed.

Say you earn about £9000, for instance. That means you could 'opt-out' to receive a rebate based on £9K but would still be required to receive credit for the difference [of £3k] up to £12k which would come to you through the state system after retirement. If you earned 15k and opted out, you would receive a 'full' rebate - in the sense that the rebate paid would cover all benefit given up, and not leave anything to come from a higher old age pension.

So it looks like your wife really has no options at this stage regarding her S2P status - or the build up of the winsor life pension [it's only an illustration in any case - not a guaranteed amount]. Although she may have 'opted out' in her working years, she will be automatically treated as 'opted in' now, and that will remain the case unless she starts to receive earnings again

HTH

EdInvestor

What your wife should do ( as should anyone who has an old contracted out pension lying about) is to check the status of this pension.

What fund is it in?
How is it performing?
Are you paying high charges (almost certainly if it's an old one)

Should this pension be moved to a new wrapper with

a)low charges and
b)a better selection of funds,

so that it will make money in future?

In particular anyone who has an old pension invested in a zombie With-profits fund, needs to get on the case asap, otherwise this pension will wither away to nothing by the time you retire.

tim158

Thanks for your replies,

I have phoned an helpline (0845 915 0150) and they gave me a couple of options. The one we are going to take is to opt back in, but to do this my wife has to fill out a CA1543 form to give a cancelation date. If my wife goes back to work at a later date we will reconsider about opting back out.

The funds/units in the policy will continue to be invested and at her age of 60 they will be accessable.

Thanks again for your advice


Tim

EdInvestor

Hello Tim

Just to point out that if your wife contracts back in now, this will only affect new contributions from any job she may have in the future. You cannot contract back in restrospectively.

It will not have any effect on the Winsor Life pension at all. This pension will still need your attention, as above.

Almost certainly, it should be moved to a new provider.

kindanice

Can you tell me: When I was 18 I set up a personal pension with Norwich Union (which I pay into monthly); opted out of SERPS and set up a second personal pension with Scottish Widows in this respect. I was employed at the time. For the last three years I have been self employed (earning less than £4500 pa). I only pay about £10 per month NI. Presumably my Scottish Widows pension is now frozen - ie. nothing is being paid into it. So I don't need to worry about opting in or staying out?

Do I understand this right? (it will be amazing if I do!).

Thanks for any help or guidance!