contracted out of state second pension

Beryltheperyl

Hi all

I've just received a letter from my insurance company, saying that I am currently contracted out of state second pension, and I have until 31st March to take action.

I haven't got a clue what this means!!! I didn't think I'd ever opted out of state pension - let alone a second one LOL

I don't work (registered disabled) - so I'm not sure whats the best thing to do. The letter gives a phone number, but says they can't answer any questions on that number.

Does anyone know who I should contact to discuss this? Obviously its in the insurance companies best interest for me to opt back in(???) but I need someone who can give me neutral advice!!

Thanks everyone
BtP

Loughton_Monkey

It would appear that at some stage in your working life you 'Contracted Out'. That will remain your status until you contract back in.

The ability to contract out ends soon. If you are not working, then no contributions will currently be going in.

You should read the letter to learn what action they are asking you to take. In addition, I would suggest you ask (if it was not given in the letter) for a valuation of the pension fund you have since you will probably need the money to replace what you would otherwise have got in 'Serps' or S2P as it is now known.

You should not worry about contacting the Insurance Company. They are not trying to sell you anything and not trying to do anything that is in 'their best interests'. Whoever they are, they will have alternative customer telephone numbers which will presumably get you through to their personal pensions department who might be able to explain more.

dunstonh

I don't work (registered disabled) - so I'm not sure whats the best thing to do.

it doesnt matter then. You have to be employed and paying class 1 NI for it to make a difference. So, you may as well contract in to save a bit of paperwork next year.

Obviously its in the insurance companies best interest for me to opt back in(???)

No. In theory it is in their interest for you to be contracted out. However, they wont provide advice on this as they are not allowed to.

I didn't think I'd ever opted out of state pension - let alone a second one LOL

You havent contracted out of the basic state pension. Just the second state pension (what used to be called SERPS)

Beryltheperyl

Thanks for all your advice

BtP

lisyloo

I am contracted out.
Mathematically I understand I will be better off contracted in (subject to current assumptions).
However some people prefer a "bird in the hand" rather than "two in the bush".
Which means it's in an account with my name on it rather than subject to whatever rules the government decide at the time.

Any comments anyone?
I'm 42 and female.

jem16

lisyloo wrote: »

Any comments anyone?
I'm 42 and female.

Only one year left of contracting out left so won't matter anyway.

kidmugsy

If contracting out is such a good deal that they're putting an end to it, it might be worth hanging on to for that last available year.

Loughton_Monkey

lisyloo wrote: »

I am contracted out.
Mathematically I understand I will be better off contracted in (subject to current assumptions).
However some people prefer a "bird in the hand" rather than "two in the bush".
Which means it's in an account with my name on it rather than subject to whatever rules the government decide at the time.

Any comments anyone?
I'm 42 and female.

Mathematics don't really enter into it much. It's more a matter of the crystal ball.

1. Your private 'Serps' pension will ultimately be worth... er... what it's worth between now and when you decide to take it. Depends upon the Stock Markets and what funds you have chosen.

2. Your S2P would have been worth whatever it would have been worth when you get to state pension age - depending upon what 5 or 6 different governments might do between now and then.

jamesd

You aren't automatically mathematically better off contracted out or contracted in. It depends on your own circumstances and the risk tolerance you use when managing the contracted out investments. If you were to use cash and not invest it you'd be worse off. If you used higher risk investments or just invested well then over the long term you'd be likely to be better off.

kidmugsy, it's being ended because the gradual change to a flat rate additional state pension instead of earnings-related would make it better for those of average and higher earnings to contract out. So they are banning contracting out.

newmee

I'm sorry but I am totally and utterly ignorant of these matters. Could some one explain to me what I should do please? I opted out of serps (I think) when I took out a private pension and two endowment policies when I was 18. Cashed in both endowments and as far as I recall the amount in my pension too. What have I done by opting out...I still don't understand. I pay into a pension scheme at work (L.A) but does it mean I have opted out of getting a state pension?

Sorry, but it is all so confusing to me!!

oops..that returned before I'd finished, hence edit!

Loughton_Monkey

It would have been illegal for you to have withdrawn from the pension policy. If you worked (other than for a local authority) then contributions were probably paid to it. Look it out. Find out its value.

As far as I know, your Local Authority scheme is contracted out anyway, and so they will be responsible for the S2P.