Opt out of SERPS/S2P?

dunstonh

lydia_teapot wrote: »

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.

I'm not sure how it would have been lower. Early death was actually more favourable on contracted out benefits. As he never made state pension age, I am not sure what you mean he would have get more had he been left contracted in.

As future date of death is unknown, it would be impossible to advise on that scenario. All financial decisions carry risk. Contracting in to SERPS was a risk. Just as contracting out was.

lydia_teapot_2

I received about £20 a month and am sure I remember the state widows pension would have been £46

jamesd

Are you comparing £20 a month with you also aged around 36 at the time with £46 a month starting from state pension age?

How did you end up getting an ongoing income? For current pensions the whole pension pot can be paid out as cash and that doesn't immediately produce any ongoing income at all. It can be invested or used to buy an annuity, if desired, but an annuity at age 36 would probably be very poor value for money.

lydia_teapot_2

The pension provider said there was a sum that would provide a monthly payout, no mention of handing this money in total to me. Their letter (prudential I think) said I would receive (approx) £20 a month as a pension. I also got a letter from the state widows pension saying it was reduced by (approx) £46 a month due to my husband having opted out. I didn't pay much attention at the time, other things to worry about, like raising our kids. Possibly nothing in this and just wondering if my husband didn't have the right advice back then given his health situation.

dunstonh

Widows whose husbands reached – or would have reached – 65 years of age on or before October 6 2002 inherited all their former spouse's Serps. But those whose husbands reach or would have reached retirement age on or after October 6 2010 will get only half their S2P entitlements.

So, you would have got approx £23pm. Plus, you would only have got it from retirement.

lydia_teapot_2

sorry you've lost me. I received approx £20 per month from the pru as of 1998 and widows state pensions informed me I had a reduced pension due to his opt out. I was 34 at the time. No idea what you mean.

dunstonh

lydia_teapot wrote: »

sorry you've lost me. I received approx £20 per month from the pru as of 1998 and widows state pensions informed me I had a reduced pension due to his opt out. I was 34 at the time. No idea what you mean.

If he had stayed contracted in then you would only get 50% of his entitlement. You say his entitlement was £46. Half of that is £23. Plus, it can be reduced if you have your own entitlement (there is a cap when you are contracted in. Contracted out benefits do not go towards that cap). Finally, it only becomes payable from your state pension age, unlike the contracted out benefits.

Draved

I've read parts of this thread and think I understand my own position (probably wrong mind).

I started my first private pension with Norwich Union (Aviva) circa 2004 and paid in for a year (ish) before being made redundant. I took a distribution fund with diminishing risk. I believe I was encouraged to opt out of S2P which I believe I did.

I found a new job straight away and have been here for 5+ years only paying in to a new pension with Legal and General for the last year or so. The fund type was similar. Overall, my private pension pot is probably quite small. I pay £70pm and my employer pays £65pm.

Can I transfer the Aviva policy to Legal and General, and is this advisable? It was a distribution fund with medium to low risk.
Can I transfer the S2P contributions to Legal and General, and is this advisable?

If I leave things as they are I'm guessing I will get (upon retirement) a small pension from Aviva, a pension (still growing) from L&G, the basic state pension, and S2P accrued from April last year?

Does this sound right and what are others in my position looking to do?

PS. I'm 34 and have been in full time employment since I was 18.

dunstonh

Can I transfer the Aviva policy to Legal and General, and is this advisable? It was a distribution fund with medium to low risk.

yes you can transfer it but we cant advise you if you should or shouldnt. That comes under regulated financial advice and the board is not authorised to give that.

Can I transfer the S2P contributions to Legal and General, and is this advisable?

You are not contracted out any more. That ended in April 2012 (assuming you were still contracted out at that time). So, this point is not applicable.

If I leave things as they are I'm guessing I will get (upon retirement) a small pension from Aviva, a pension (still growing) from L&G, the basic state pension, and S2P accrued from April last year?

On current rules, yes.

Draved

dunstonh wrote: »

You are not contracted out any more. That ended in April 2012 (assuming you were still contracted out at that time). So, this point is not applicable.
.

Thanks for the feedback. What happened to these S2P contributions?
Do they stay part of your private pension pot?