Opt out of SERPS/S2P?

dunstonh

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.

Pru do not give any advice and do not give any hints. Dont read anything they have written as advice.

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.

You are over the pivotal age that used to be the way to measure these things which would suggest contract back in but the only way you will get advice on contracting in/out is to see an IFA. Many will shy away from it because there has been so little guidence for years as to which is best. Back in 1996, the SIB (what is now the FSA) said that people were significantly better off with contracting out. Now its being said that more people are a little worse off. Of course the stockmarket crash has had an impact on that and the position should improve again. However, when the regulator doesnt know what is best and no providers are giving any information then its hard for anyone to give concrete absolute advice.

Contracting in/out is one of those cases were you wont really know what is best until you get there and look back with hindsight.

Trucker_2

Pru would'nt give advice, i was trying to read between the lines, like you said i won't know untill i get there, thanks for the quick reply.

Trucker.

EdInvestor

Having contracted back in for new contributions what you now need to do is pay attention to that fund you've got at the Pru.It needs to be well invested in funds that perform and which have low charges.

What is it invested in now?

What charges are you paying?

Check it out, because it's very possible you will need to move it, if you want to match what you would have got from Serps if you had stayed contracted in in the past.

Trucker_2

Hi Edinvestor.

Your going to throw your arms in the air at this, i only pay £31 a month, i'm afraid i've never trusted them, or any for that matter, and its just my luck to lose it or die just as i hit retireing age, you see i want all the money, i don't really care if i just get the OAP.

So this is what i have been doing over the last few years. and will continue to do so for a few years yet, at least 10 to 15. if things are looking good i'll use it to suppliment my pension, if not i'll spend it.

£31 Pru pens
£100 Maxi ISA
£100 Unit trust
£250 Shares
£250 Int Acc 7% will be reinvested

Thank god the wife works.

Trucker.

EdInvestor

Your going to throw your arms in the air at this

Not at all Trucker. I'm pleased to hear it, it's what I would do too.:T

However since you've got such a lot of investment experience, I'm surprised you would consider letting the Pru pension just languish.

Getting insurance company pensions to perform can be a bit of a challenge of course. But it should be someting you would enjoy.

Next year for instance, you should be able to move it to a Sipp and invest it in shares.

That might be fun.

Trucker_2

The reason i mentioned throwing your arms in the air is because it seems people are always going about
pensions, ( I don't mean in these forums by the way, i'am new so have not read much.) and what i have
read about is really great stuff.

I have'nt got any experience i'm afraid, i just wanted to be able to get my hands on all the money.

As for the Pru pension, it's been that long i tend to forget about it.

What is a sipp by the way, could you give me a brief explanation.

Thanks

Trucker

EdInvestor

A Sipp is a "Self invested personal pension". If you move money in an ordinary pension to a Sipp you can invest it yourself in funds or shares not normally available in pensions. This has been possible for years, but it used to be very expensive.But now a lot of discount brokers have set up Sipps on the internet, often with no annual fee, so you can operate them the same way you would a normal share account.

However you can't do this with contracted out money yet, this won't be available until early next year.In any case perhaps it's not relevant to you.

Trucker_2

Hi Edinvestor.

Thanks for explaining that, why do you say in my not be relevant to me?

Trucker.

dunstonh

Hybird sipps can do contracted out funds so there is some hope there. Also, there are concerns that a number of the smaller, low cost SIPP providers will have to put their charges up when regulation of SIPPs comes in as they will have to meet their solvency requirements. Currently, as SIPPs are unregulated, they dont have to do that.

Trucker_2

Thanks for letting me know

Trucker