Prudential SERPS what if i leave

trets77

hi there . i have a fairly good final salary company pension scheme, however my SERPs have been going to the PRU since i was 18 (now 35).
i admit i really did not think about it way back then as i was naive and just followed the pension advisors advice.

every couple of years i get a letter asking me if want to opt out of the PRU and re join the state peson for my SERPS. what are the consequences of doing this will i get i split when i retire of some Pruedantial money and some money off the state??.

as i understand it my Pru may earn me more maybe earn me less when i retire,



i pretty good with my knowledge all things money saving but this is something i,m not up to speed on at all.

cheers

dunstonh

hi there . i have a fairly good final salary company pension scheme, however my SERPs have been going to the PRU since i was 18 (now 35).

Are you sure Pru has been getting the rebates? Many final salary schemes are contracted out themselves. The Pru scheme may just be contracted out on paper but the rebates going to the occ scheme.

every couple of years i get a letter asking me if want to opt out of the PRU and re join the state peson for my SERPS. what are the consequences of doing this will i get i split when i retire of some Pruedantial money and some money off the state??.

nothing if Pru arent getting the rebates and the occ scheme is. However, if we assume Pru are getting them then they would be investing them in the way you instructed. If investment returns are high enough you could get a higher pension in retirement than if you are contracted in. If returns are lower, then you could end up with less.

Contracted out pensions can be taken between age 55 and 75 (your choice) and upto 25% can be taken as a tax free lump sum. Contracted in benefits match your state retirement age (67 in your case) and cannot have any lump sum payment from them.

Neither option is risk free. One is down to invesment returns and the other is down to legislative risk. The Govt has already reduced contracted in benefits 4 times since it was introduced. The choice you need to make is which suits you. You arent going to know what the best option turns out to be until you get there.

One thing is pretty clear, Pru isnt going to be the best of providers for you so you ought to get that reviewed.

trets77

so let me recap to make sure i undersatnd. when i joined my current companys final salary scheme , the money the PRU was getting from the state to invest for me , might have stopped and now be going to the my current pension scheme. it is the Railway pension scheme by the way.

so what about the money the Pru collected off me for all thoose years did the railway scheme get that as well??

or does the Pru still have it ??? i,ll be honest i don,t rememeber the last letter they sent me , and i cannot remember one since i joined the railway

who can i contact to sort this all out for me i.e a better provider who knows whats going where and advise me accordingly???

dunstonh

Just checked the scheme documents for the Railways DC scheme and it is not contracted out. So, Pru have been getting them.

who can i contact to sort this all out for me i.e a better provider who knows whats going where and advise me accordingly???

Its a case of doing it yourself or getting an IFA to do it for you. (its not the sort of thing most tied agents would do and you wouldnt want to use them anyway).

EdInvestor

What fund is the money invested in at the Pru and how much is the pension now worth ( transfer value)? That's step one to find out.Also ask what charges you are paying and what alternative funds are avilable to invest the money in.

Contracting out is due to be abolished for PPs in 2012.So given the flexibility it offers at retirement , it may be sensible to stay contracted out until then and get the extra rebates. After then, you will be contracted back in so don;t need to worry.

But you do need to keep watch on the money that is already out and at the Pru, so as to make sure it performs long term.When we see the info we can take a view on what to do with it.

dunstonh

Pru aligned all their charges to 1% amc a few years back on legacy contracts. Its not an exact 1% but equates to 1% at 7% growth. At 5% growth its a little less and at 9% growth its a little more.

You wouldnt leave Pru due to charges but you would due to investment quality.

trets77

cheers guys i will dig the info out

trets77

okay the SP2 fund at the Prudential my serps is going into is called

With Profits cash Accumilation Fund

they had computer problems when i called so are sending me the figures but in January 2005 it was wort £6330

trets77

BUMP

any advice ??

EdInvestor

Oh dear.:( Cash is the last place you want a pension invested in, as you can see.

First, could I just suggest that you check with your office about the S2P rebates, and ask if they are receiving them or not.(Keep your fingers crossed that they are).

Point 2 is to get that pension properly invested somewhere.What other funds does the Pru offer?