Pension advice please for a newbie

linnyp

I'm a mum to 3 who has been out of the workplace since 2000. Just before I finished work in 2000 I had a very tiny ( I was only working part time) works pension going and I believe I opted out of Serps. That pension as far as I know is 'in limbo' - I occasionally get letters from that company but havn't added anything to it and I think it only has a couple of hundred pounds in it.
Anyway, I started working part time again this year and don't know what to do about a pension. It's a very small company I work for and for personal reasons I don't want to go into their scheme.
What are my options? I'm 30 years old, don't have a great deal to put away but want to be putting *something* away bearing in mind I'm not married to my partner and I would be putting more into it in around 5 or 10 years time when I will probably go back to full time work.
How do I go about opting back into Serps as I am hearing that is what I *should* be doing?
Any advice would be very gratefully received.

dunstonh

What are my options?

If the scheme the employer operates is a proper occupational pension scheme then you are limiting your options if you want to go into your own pension. All advisers will not transact a pension if you opt out of the company scheme and many insurers will refuse your application for the same reason (at least those that ask that question will).

The reason is that nearly all occupational pension schemes are better than personal schemes. If the works scheme is a group personal pension with small contribution matching then you should take it to the level where they match contributions. If its just a group stakeholder arrangement with no employer contributions then you are free to do what you like as that isnt classed as an occupational scheme.

How do I go about opting back into Serps as I am hearing that is what I *should* be doing?

About 8 out of 10 people should be opted into Serps. We dont know if you are 2/10 or 8/10 so cant comment on whether you should or not. As for how, that would depend on how you were contracted out before. If it was a final salary pension scheme you were with before then you are not contracted out in the same sense as contracting out with a personal pension and you need not do anything. If you chose to contract out using a personal pension then you let the pension provider know that you wish to contract back in and they will send the appropriate form.

EdInvestor

Give the people at the pensions servioce a call for instructions about opting back into Serps/S2P.

http://www.thepensionservice.gov.uk/atoz/atozdetailed/rpforecast.asp

While you're onto them also ask them to update your state pension forecast (for the basic state pension) for home responsibilities credits etc. Are you on target for the full amount?

Does your company make a conttribution into their scheme for you if you join? If so it's a pity to lose free money.

If they don't and you pay basic rate tax, it's better to open a Stocks and Shares ISA and start investing that way.

Meanwhile contact your private pension company and ask for a "current value" and a "transfer value", to see if it's worth moving the old pension.

dunstonh

Give the people at the pensions servioce a call for instructions about opting back into Serps/S2P.

Wouldnt it be better to find out if it was contracted out using an occupational scheme or contracted out using a personal pension first?

The terminology may be similar but the implications are different, as is the course of action required.

linnyp

Wow speedy replies!!! I'll definately get a forecast - the site keeps crashing on me at the moment.
About the new employer's pension scheme - it's a very new, very small company. What would happen if the company didn't survive, where would that leave me? As far as I know the employer doesn't contribute to the pension - will find out next week.

linnyp

dunstonh wrote:

Wouldnt it be better to find out if it was contracted out using an occupational scheme or contracted out using a personal pension first?

The terminology may be similar but the implications are different, as is the course of action required.

It was an occupational scheme. I remember having a longwinded conversation with Personnel about whether I should be opted in or out and they didn't really know but suggested opting out as that was what a lot of other employees were doing. :shocked: Hindsight..........

dunstonh

The Personnel department are not authorised to give financial advice so they cant tell you whether you should opt in or out. So when they suggested a course of action, they were actually breaking the rules. Most personnel departments go to an extreme level to give no advice and even wont answer fact based questions in fear of breaking the rules.

You say it was an occupational scheme but we need a bit more than that. Was it a final salary (also known as defined benefit) or a money purchase (also known as defined contribution) scheme? Or was it not a true occupational scheme but a group personal pension?

It is important to know which contracting out has two different meanings in pensions. We need to know which is applicable.

EdInvestor

Wouldnt it be better to find out if it was contracted out using an occupational scheme or contracted out using a personal pension first?

It's often easier just to ask the Pensions Service who will explain. :rolleyes: