weird pension thingy

Wig

I know nothing about pensions, but OH has been working for a company since about 1991 and apparently has a pension with them with Equitable life.

There is also the SERPS pension, now, a long time (circa 1987) ago someone told her it would be a good idea (because there would be no pensions in the future) to swap out of SERPS and the government would match the pension contributions for a year.

So she signed up, and over a few years got some statements coming in from Gan? (life?) anyway, we didn't like what we saw all the money was taken away in costs (probably the commission for the person who sold it to her) and I'm pretty sure we contracted back into serps (how do we confirm this?).

Anyway this company got bought up by Windsor life Assurance Co. and we have continued to recieve statements with a balance of about £300 with no further contributions being made. This balance varies each year gradually it grew to about £500 with the current statement (just arrived) saying:
"Transfer value of £598.43" it also calls itself
"Wealth Plan COPPS component"

We have no idea what this thing is for or even if she is allowed to have it (more than 1 pension etc).

*Could she claim anything for misselling?
*What should we do with this thing/plan"?
*How do we find out about the status of the Equitable life Pension?
*How does one confirm one is returned to SERPS after having contracted out?

clairehi

Yes she is allowed to have more than one pension.

My OH has a similar COPPS (contracted out personal pension) scheme with Windsor Life which we are about to close.

Windsor Life provide information on their website about contracting-out which I found helpful - have a read

https://www.windsor-life.com/Text/CustomerService/ContractedOutFAQ.htm

The letter you received, was it an annual statement. If so it will state the amounrt of contributions paid in last year. If this is zero, chances are she has contracted back in. You could phone the National Insurance Contributions Office to find out for sure whether she is contracted back in.

The employers HR department should be able to provide details of the Equitable Life scheme.

Wig

Is he at retirement age then? Can we close it too? what happens to the money if we close it?

EdInvestor

You will need to transfer the pension somewhere, you can't just close it.Almost certainly you should also transfer the pension at Equitable too, so the best plan may be to start a completely new pension with low modern charges and decent funds and transfer the other two into it.

dunstonh

*Could she claim anything for misselling?

What has been missold?

*What should we do with this thing/plan"?

Review the investment options and get it transferred to a modern pension plan.

*How do we find out about the status of the Equitable life Pension?

Ask them.

*How does one confirm one is returned to SERPS after having contracted out?

Ask the provider if it is still contracted out.

If you dont feel you know what to ask and what to look out for then you can ask an IFA to do a pension review. The IFA would then write to the providers, get the information, do a cost analysis and make the recommendations.

Wig

dunstonh wrote:

What has been missold? .

Wasn't there a lot of hoo haa ages ago about pensions (contracting out of serps) being "missold"? << That's what I mean.
What are the criteria of qualifying for misselling?
If it was missold has any deadline now passed?
In this case it may not have been the best thing for my OH to have done, it may have been that telling my OH "in the future the will be no government pensions so swap to us now" was not true or might have been seen/known as an unfair (sharp) practice (at the time). It may be that a 3 minute sales pitch in Burger King was not appropriate method of determining if the contract out of serps was right for my OH.

If we went to an IFA, are there some who just charge a flat fee, rather than take a commission on your pension policy that they set up for you. The idea of anyone taking a commision (out of my contributions) is not acceptable to me. I like to be charged a fee for a service - end of. How much will these fees be and for what service?

dunstonh

Wasn't there a lot of hoo haa ages ago about pensions (contracting out of serps) being "missold"? << That's what I mean.

Its still ongoing but its not a lot of hoo haa. The FSA have identified a couple of hundred thousand individuals who contracted out outside of the usual age range.

It has not yet decided how it will deal with these but expectation is that those cases will be instructed to have reviews done without the need to complain as they can be identified.

What are the criteria of qualifying for misselling?

That it wasnt the best thing for you. Harder to prove though as contracting out is right for about 1/3rd of people (up until 1996, everyone who contracted out was better off. By 2002, everyone was worse off. Currently its 1/3rd better off and rising all the time).

There are benefits of contracting out as well as negatives (such as being able to access contracted out funds before the state retirement age and getting 25% tax free cash out of it. Neither of these are possible when contracted in).

If it was missold has any deadline now passed?

There is no deadline as the FSA have stated that there is no evidence of widespread mis-selling. Just concerns about the cases that it has identified.

In this case it may not have been the best thing for my OH to have done, it may have been that telling my OH "in the future the will be no government pensions so swap to us now" was not true or might have been seen/known as an unfair (sharp) practice (at the time). It may be that a 3 minute sales pitch in Burger King was not appropriate method of determining if the contract out of serps was right for my OH.

A 3 minute sales pitch wasnt appropriate and that sort of thing did occur. However, you have to remember that the Govt itself wanted everyone to contract out and gave incentives to do it in the early days. A lot of the problems occured after 1997 when Labour got into power and is very much linked to them.

Unlike endowments where it is zero risk vs investment risk, with contracting out you have investment risk vs legislative risk. The Govt has already reduced SERPS/S2P benefits 4 times since it was introduced. In all these cases, they have not reclaimed the money from those that contracted out but those that contracted in have seen benefits reduce. So, you cant complain that you wanted the risk free option as its a choice of one risk vs another.

If we went to an IFA, are there some who just charge a flat fee, rather than take a commission on your pension policy that they set up for you.

All IFAs have to offer a fee option. You are not allowed to be called an IFA if you don't.

The idea of anyone taking a commision (out of my contributions) is not acceptable to me. I like to be charged a fee for a service - end of. How much will these fees be and for what service?

A common method is a hybrid fee option where you agree a fee and its paid for out of the commission with any surplus being rebated into the plan or used to reduce charges. The problem you have with pensions is that they are generally a low commission payer and fees can be quite a bit more than the commission that would be payable. Also remember that you dont pay the commission. The provider does. You pay charges. It could take you 15 years or so in charges to make up the fee that you would have paid up front. Sometimes commission is the better option.

Fees would typically be £600-£2500 depending on where you go.

clairehi

Wig wrote:

Is he at retirement age then? Can we close it too? what happens to the money if we close it?

Sorry that was a bad choice of words. He is transferring it to his new employers' stakeholder scheme.

You really need to find out about the Equitable Life scheme. If the employer is contributing to it then your OH should keep it going as it is free money. It may accept the transfer value from the Windsor Life fund. For the sake of a £500 pot it seems somewhat over the top to set up a whole new pension elsewhere.

clairehi

Wig wrote:

I we have continued to recieve statements with a balance of about £300 with no further contributions being made.

If no further contributions are being made, s/he is no longer contracted out into this scheme.

Wig

Ok thanks to Dunstonh for your indepth reply, much appreciated.

Thanks also ClaireHi, yes it is an employers based pension type of thing - Equitable life - and yes they (the employer) contribute (I think).

I downloaded the pdf files on that Windsor life page so I have some reading to do.

Cheers.

P.S Dunstonh is there any magazine like "Which Mortgage" "What HiFi" that covers pensions?