Opt out of SERPS/S2P?

clairehi

My OH took out a personal pension in 1991 when he was 18, he has never paid any premiums but filled out the forms to contract out of SERPS as it then was.

Shortly afterwards he left his job, moved house and lost contact with the provider (General Portfolio) which have since been taken over by Windsor Life. I have asked him to contact them to get a statement of benefits and find out if his SERPS/S2P is still being paid into this fund.

Assuming that he has been paying into this fund all this time, what are his options now for the money already in it? I fully expect that the fund it is in is totally hopeless.

He is currently contributing to an occupational final salary scheme (been there less than 12 months), perhaps we should get a transfer value for it, or could it be moved to another personal pension? Do I need an IFA for this (Im guessing yes...)

EdInvestor

Assuming that he has been paying into this fund all this time, what are his options now for the money already in it? I fully expect that the fund it is in is totally hopeless.

He is currently contributing to an occupational final salary scheme (been there less than 12 months), perhaps we should get a transfer value for it, or could it be moved to another personal pension? Do I need an IFA for this (Im guessing yes...)

After the fund update arrives, then ask him to get a transfer value, so you can see what kind of (no doubt awful) transfer penalty you have to pay to leave.

Then think about moving the money to another pension . You can may or may not need an IFA, depends on how much effort you're willing to put in to find a new home for the money yourself.

clairehi

thanks Ed. thanks button seems to have vanished.

Will be back when we have received info from the provider.

easilyamused

I'm pretty confused!

I'm 33 years old with no previous pension. I've recently joined a company that offer a stakeholder pension where they pay a pretty generous contribution each month. Like to join this and pay in as much as I can each month but not sure whether opting in or out would be best for me in my circumstances?

Can anyone help?

dunstonh

easilyamused wrote:

I'm pretty confused!

I'm 33 years old with no previous pension. I've recently joined a company that offer a stakeholder pension where they pay a pretty generous contribution each month. Like to join this and pay in as much as I can each month but not sure whether opting in or out would be best for me in my circumstances?

Can anyone help?

If you have the right risk attitute, the right provider and pension wrapper with the funds available to acheive the right growth potential, a big enough rebate and enough time for it to grow, then you may break even or make money by contracting out. Of course, you may not make enough.

However, you also have to factor in that you can take contracted out pensions at any time between 55 and 65 and have a 25% tax free lump sum from that value. When you contract in, you have to wait until state retirement age, whenever that is and you cannot take a tax free lump sum.

Also, whilst contracting out contains investment risk, contracting in contains political risk. In the past occassions where SERPS has been reduced, those that contracted out have not had their benefits reduced like those that contracted in. Going forward, we keep seeing in the media that a move to a single state pension is the most likely course of action. This would be at the expense of SERPS/S2P. Now, what actually will happen, we dont know. However, expectation is that SERPS/S2P from contracting in would be lost but contracted out benefits would be kept. Partly as clawing back the contracted out funds would require primary legislation, would almost certainly bankrupt a few insurance companies and create a stockmarket crash bigger than anything seen in recent history.

So, on one hand you have investment risk and on the other you have political risk. There is no hard and safe answer as to which is best.

chrisagr

I contracted out of SERPS many years ago, then left my job and went to a firm that offered a contracted out pension scheme. I've since left that job and my current employers scheme is not contracted out.

Can anyone give me any advice as to what should have happened to the SERPS/S2P payments into my pension scheme during the period where my company scheme was opted out, and what should be happening now?

EdInvestor

Contact the State pension sevice for info about where your SERPS/S2P rebates have been sent over the years, and also for an up to date forecast of your state pension entitlement.

It's probable that your earlier SERPS/S2P payments are frozen along with your 2 old pensions, and that you will now (perhaps have already) be officially contracted back in by your current scheme.You can check with your current pensions department to make sure that is the case.

Rubyloo_2

I wonder if anyone can answer a few questions for me!
I was contracted out of serps by Abbey Life back in 87 & was advised by them to contract in last year which I did, I was cold called by a company Called Tekram Goldberg who have told me that I can claim compensation from Abbey Life as I was miss sold the policy! They want £500 up front & say they will charge 12% plus VAT once I get compensation. They think that I should get around £13.000 back............does this sound right? I know nothing about pensions, state or private so I am now very confused indeed! I haven't £500 spare cash as I don't work at present as I have a young family but obviously want to claim back the money if is due to me.
Has anyone heard of this company or delt with them? Can I claim the compensation back myself? Where do I start?
I feel really thick.........Hope somebody can help!
Thanks in advance
:beer:

dunstonh

I was cold called by a company Called Tekram Goldberg who have told me that I can claim compensation from Abbey Life as I was miss sold the policy!

There are a couple of cowboy claims companies doing this. They dont know you have been mis-sold as there are advantages as well as disadvantages to contracting out. Read this thread below to get a better idea.

http://forums.moneysavingexpert.com/showthread.html?t=257877

hey think that I should get around £13.000 back............does this sound right?

Nope.

I know nothing about pensions, state or private so I am now very confused indeed!

Get independent advice on whether it is best to contract out or not. The Abbey Life plan can be looked at as well as its a pre 2001 contract meaning it will be priced over the odds by modern standards.

Can I claim the compensation back myself?

You can put a claim in yourself but you wont get paid any compensation.
1 - you have to state your reasons for complaining. You dont know anything about pensions so what are you going to complain about.
2 - pensions redress is paid into pensions and not into your pocket.

Where do I start?

I wouldnt bother. The general feeling is that whilst contracting out methods of the late 80s, early 90s wouldnt be compliant by todays standards, the FSA has stated that any complaints would be addressed by looking at the standards and information that was present at the time contracting out took place. As the Govt was pushing contracting out at the time and there even incentives for doing so, it is unlikely that complaints would be upheld unless a serious breach of rules had taken place.

There are advantages to contracting out as well so you could end up complaining about something that is beneficial to you.

Trucker_2

Hi Folks.

I had a letter from the Pru it must have been about 2 years ago, can't quite remember, about contracting back in to Serps/SP2, it seemed like they were advising this even though when i spoke to them they told me i need to speak to an IFA.
I did contract back in by the way, now after reading through the threads i'm don't know what's best, i do know this though, i'am £33 a month worst off in my pay packet each month.
So, do I contract back out and invest the money, or stay as I'am.

I'm 49 by the way, any advise would be greatly appreiciated.

I found this site with a paychecker, to check against your payslip if you are contracted in or out, hope it helps.

http://www.digita.com/taxcentral/home/employment/payslipcalculator/default.asp

Trucker.