Opt out of SERPS/S2P?

Charnwood

I contracted out in 1989. I made personal monthly contributions on top of the SERPS contribution. The company was Barclays Life.

Circumstances forced me to make economies - the pension contributions had to stop after a few years of being in the scheme.

I contracted back in a couple of years ago (2010). In 2011 I was informed that the policy was being acquired by Re Admin/Windsor Life. I have not heard a word from Re/Windsor. At the last count ccording to Barclays Statement dated April 2000 I had made £2,800 in personal contributions in the years I was paying in.

What happened to those funds when I contracted back in?
Should I still be receiving an annual statement from Windsor?

dunstonh

What happened to those funds when I contracted back in?

They remain invested and subject to investment returns.

Should I still be receiving an annual statement from Windsor?

Now called ReAssure. Yes you should.

Charnwood

Thanks for that.

rozzer1971

Hello !

I seem to have relatively simply pension arrangements compared to some on the forums - if there is such a thing ! - so I hope someone might be able to give me a bit of advice.

Up until 2006 my only pension provision aside front the usual State one was established when I opted out of SERPS some years before. It seems I was in the age group where this was advisable so I'm not looking to make any mis-selling claims.

I also have received my annual statements regularly from Windsor Life, now ReAssure and in fact my post has been prompted by my most recent one arriving today.

I have just turned 41 and my understanding is that since April 2012 there will be no further contributions paid into my Reassure pension. The annual statement they have just sent me states that my Current Value is £22,399.70, but has a Transfer Value of £18,143.00. They estimate that my pension if I retire in December 2036 would be £1,380.00 each year.

Now since I started with my current employer in August 2006 I have been paying into my company contributory pension. I have no plans to leave the company in the near future and I will be very surprised if I leave before I retire - at least not voluntarily !

My question is given the relatively small pension predicted to be paid from my SERPS fund, would I be better off leaving it in place or would it be better to take the transfer value and add it to the company pension I am now paying into ? I'm assuming this is possible ?

I realise that speaking to an IFA would be best before making any firm decision but I'd be interested to hear opinions from the very knowledgeable and helpful members here.

Thanks in advance of any replies.

mania112

rozzer1971 wrote: »

Hello !

I seem to have relatively simply pension arrangements compared to some on the forums - if there is such a thing ! - so I hope someone might be able to give me a bit of advice.

Up until 2006 my only pension provision aside front the usual State one was established when I opted out of SERPS some years before. It seems I was in the age group where this was advisable so I'm not looking to make any mis-selling claims.

I also have received my annual statements regularly from Windsor Life, now ReAssure and in fact my post has been prompted by my most recent one arriving today.

I have just turned 41 and my understanding is that since April 2012 there will be no further contributions paid into my Reassure pension. The annual statement they have just sent me states that my Current Value is £22,399.70, but has a Transfer Value of £18,143.00. They estimate that my pension if I retire in December 2036 would be £1,380.00 each year.

Now since I started with my current employer in August 2006 I have been paying into my company contributory pension. I have no plans to leave the company in the near future and I will be very surprised if I leave before I retire - at least not voluntarily !

My question is given the relatively small pension predicated to be paid from my SERPS fund, would I be better off leaving it in place or would it be better to take the transfer value and add it to the company pension I am now paying into ? I'm assuming this is possible ?

I realise that speaking to an IFA would be best before making any firm decision but I'd be interested to hear opinions from the very knowledgeable and helpful members here.

Thanks in advance of any replies.

Considering the cost of an IFA making this transfer and the loss on your pension (the transfer value is lower than the actual value of the funds) I would say it would not be a good idea at this time.

nickbaker66

In 1996 i was advised by a CIS rep (who knew my family very well for many years) as we had taken out various policy's with them, home contents, buildings insurance and sum assured policys etc .....to contract out of SERPS.

I have been contracted out for the last 16 years and even when it changed to SP2 i still opted to stay out.

Now that i am 37 i am wondering did i do the right thing and would it be a good idea or not to opt back in, with the retirement age being upped of late and rumours of it being increased again, i am in a dilemma will i ever get anything with the retirement age being raised if i opt back in or as it stands (being opted out) at least i am going to get something.

Sorry for sounding dumb but if i remain opted out would i get a pension from the government and whatever my opted out fund accrued ? or is it i will have to survive on how well or not my fund has done ?

thanks for reading

jamesd

rozzer1971 wrote: »

I have just turned 41 and my understanding is that since April 2012 there will be no further contributions paid into my Reassure pension.

Correct, though there's a small chance that the one for the 2011-12 tax year hasn't arrived yet. If it has, that'll be the last.

rozzer1971 wrote: »

The annual statement they have just sent me states that my Current Value is £22,399.70, but has a Transfer Value of £18,143.00.

The real value is the transfer value, not the current value. The description implies that you're using with profits investments and that there's a significant market value reduction at the moment.

rozzer1971 wrote: »

They estimate that my pension if I retire in December 2036 would be £1,380.00 each year.

That will be assuming some low level of growth then buying an annuity increasing annually with RPI and providing a reduced pension for a spouse on your death. If you were instead to use a level annuity the income level would start out at perhaps twice that and gradually decline in real terms with inflation. Something over 90% of all annuities sold in the UK are level, single life. If your health is impaired in a way that reduces your life expectancy the initial payout would also increase, though they may just offer you a standard annuity that ignores this possibility, since they aren't required to give you a good deal or even tell you that you might qualify for something better.

rozzer1971 wrote: »

My question is given the relatively small pension predicted to be paid from my SERPS fund, would I be better off leaving it in place or would it be better to take the transfer value and add it to the company pension I am now paying into ?

We don't know enough about the work plan to say. It's contributory but is it final salary, average salary or some other defined benefit form or is it defined contribution, where you can pick the investments to use if you like?

Assuming the current money is in a with profits fund and given your age, getting the money out and into a better range of investments is likely to be a good idea.

jamesd

nickbaker66 wrote: »

In 1996 i was advised by a CIS rep ... to contract out of SERPS. ... I have been contracted out for the last 16 years and even when it changed to SP2 i still opted to stay out. ... Now that i am 37 i am wondering did i do the right thing

Almost certainly yes. Nothing there for you to regret, it was a good move. If nothing else, the restrictions on having to buy a specific low paying annuity have now been removed and the money can now be mixed with all other pension money, so it's now much less restricted than it used to be. You've also got the option to take income from it from age 55 or later if that's appropriate for any early retirement plans you have.

nickbaker66 wrote: »

would it be a good idea or not to opt back in

You're already opted back in. Contracting out for defined contribution pension schemes ended in April 2012 and the last payments will be for the 2011-12 tax year. The money remains yours in your pension pot to invest as you see fit along with your other pension pots.

nickbaker66 wrote: »

will i ever get anything with the retirement age being raised if i opt back in

It's irrelevant. You contracted out and the money from the contracted out payments is yours to invest. It doesn't go back to the government now you're contracted back in. That contracting in and out only affects the money for each year you're in or out, deciding if some goes to the contracted out pension or to accrue you some S2P/Additional State Pension income benefit.

nickbaker66 wrote: »

Sorry for sounding dumb but if i remain opted out would i get a pension from the government and whatever my opted out fund accrued ?

Yes. Two independent things. You'll be accruing some S2P/Additional State Pension for the years not contracted out and you'll get whatever your pension pot investments can produce as well. The Additional State Pension will be payable from state pension age, the contracted out part from 55 or whenever later you choose to take it, or whatever later level a change in the law might produce.

nickbaker66 wrote: »

or is it i will have to survive on how well or not my fund has done ?

Partly. But in addition to the Additional State Pension you'll get the Basic State Pension, since contracting out never affected your entitlement to that. You've been getting one year of Basic State Pension entitlement for each year you've been working even while contracted out and not getting the SERPS/S2P/Additional Sate Pension's earnings-related extra addition for those years.

nickbaker66

Thanks jamesd your reply has answered loads of question i had and put my mind at ease its not as bad as i thought

lydia_teapot_2

My late husband was told it was best to opt out in the early 90's as pensions would cease to exist. Wasn't given any advice other than this. He was a chronic asthmatic and this condition eventually killed him at age 36 in 1998. I seem to remember at the time The pension I got from the opted out serps was lower than if he had been in the state system. Would this be a case of miss selling? Due to his health he wouldn't knowingly take risks with finance.