Dumb alert...advice needed.

ljjratcliffe

Hi there,

never posted on this board before so gently please.

So, I am 40 now, working since I was 16, all but maybe 5 years or so when I had children and was in college.

I recieved a letter from the DWP today, saying that Sun Life Financial of Canada were trying to get hold of me. The letter enclosed from Sun Life, says they think I may have a policy with them.

Now I have a recollection, I think I must have been about 17-18, very green and no idea about finance. Somebody (who signed me up to the policy) told me that I should opt some of my money out of my state pension contributions into their scheme. Being gullible, I signed up....and then forgot about it completely. I've moved so many times, I'm sure they lost me.

So, i've dug around and I think I opted out of SERPS and put it into this policy. I think this means that money I get from my employment contributions is paid into this private policy, not my public pension (in a very basic context)??

Can somebody explain what I've done and what this could mean for me.

I think I also read that they are abolishing contracting out of SERPS or whatever it's called now?

Any advice please on what this means for me and what I should do now?

Thanks

Lou

hugheskevi

So, i've dug around and I think I opted out of SERPS and put it into this policy. I think this means that money I get from my employment contributions is paid into this private policy, not my public pension (in a very basic context)??

Can somebody explain what I've done and what this could mean for me.

You contracted-out of SERPS.

This means that you chose to not accrue part of the State Pension in return for some of your National Insurance contributions being put into a personal pension instead. That money will have been invested in assets in some fund or another, and still is.

This means that rather than the State paying you SERPS in retirement, you will have a private pension income instead.

I think I also read that they are abolishing contracting out of SERPS or whatever it's called now?

From 2012 you can no longer contract out of State Second Pension (which replaced SERPS about a decade ago) into a Defined Contribution (which include personal pensions) arrangement.

You can still contract out into a Defined Benefit (eg final salary) arrangement.

Any advice please on what this means for me and what I should do now?

From your post in another thread, you are now a public sector worker.

You will therefore be contracted-out into the public service pension. Your contracting-out rebates would have stopped going into Sun Life at such a time as you joined another contracted-out scheme.

Not a great deal you need to do - although it would be a good idea to get in contact with Sun Life, establish ownership of your funds, check the value of funds and what they are invested in, and assess whether they would be best left where they are or transferred to another pension provider.

Hopwood04

You most likely have a qualified plan with Sun Life. Many times a person will take and put part of their paycheck into a deferred compensation plan (qualified plan). Call Sun Life and ask them what you have.

webnibbler

I have the same plan set up with Sun Life of Canada. Having opted out of SERPs many years ago without understanding what it was. I've been completely unaware for years that this money was being paid into the SLFC plan.

Have a look at the investments you have with SLFC. In my case the money is in a rather poorly performing fund so I'm transfering the value into funds with another provider that will hopefully make the money work harder.

As I understand it, being opted out as long as I have will mean a reduced S2P pension, so getting as much appreciation as possible on the value of the payments is going to be key to replacing the lost S2P value.

Maybe turning 40 makes you suddenly take an interest in your finances!

Loughton_Monkey

Yes, your first job is simply to re-establish contact with Sun Life and establish what funds you are in and what is the value. It is almost certain that S2P [as we know it today] will not apply in the same way by the time you retire, so it is difficult to predict whether your opting out was 'good' or 'bad'. Most likely it will turn out to be in your favour.

jamesd

ljjratcliffe, it's also worth getting yourself a State Pension Forecast. That'll be useful for your future planning.

It won't be a deferred compensation plan. That's not something that applies to contracted out rebates from the UK national insurance scheme. Instead it'll probably be a protected rights pension pot.