should i remain contracted out or contracted in

Deals_2

with scottish life. I initially had this policy taken out by a company years ago that i used to work for. i do not invest anything in it and have not done so for ages. at the moment believe a little bit more in property investment and just keeping my main national insurance stamps paid regularly until i earn more money. what should i do? any help appreciated. thanks in advance.

EdInvestor

Are you actually contracted out at the moment ? That would mean that NI rebates are being paid into the plan every year if you earn enough.

You should check the performance of this pension, including what funds it is invested in, and what charges you are paying.If the money is in the With profits fund, ask if there are any guarantees attached.If not, you should probably consider moving the money to better performing funds - ask which ones are available.

If the charges are reasonable and there is a good fund choice, there would be no need to move the pension as a whole from Scottish Life.

Deals_2

with the additional info. thanks

EdInvestor wrote:

Are you actually contracted out at the moment ? That would mean that NI rebates are being paid into the plan every year if you earn enough.

You should check the performance of this pension, including what funds it is invested in, and what charges you are paying.If the money is in the With profits fund, ask if there are any guarantees attached.If not, you should probably consider moving the money to better performing funds - ask which ones are available.

If the charges are reasonable and there is a good fund choice, there would be no need to move the pension as a whole from Scottish Life.

Deals_2

hiya edinvestor just read through this scottish life stuff and complex for someone who does not deal in this stuff. i have called up scottish life and there are sending me a list of the 16 different funds i think i can invest in. They say that 99.75% is managed and 0.25% is not managed. there is a guarantee. did not ask about charges as forgot.
will await to get letter which they say is going out today. looks like the pension fund has grown a bit too since i read the update a few months back.

EdInvestor

Ask them to send info on the guarantee as well - what kind, what rate, any restrictions etc. This probably applies only if you stay in the With profits fund. Whether or not it's worth keeping will depend on various factors.

Deals_2

will call them back. thanks again.:T

EdInvestor wrote:

Ask them to send info on the guarantee as well - what kind, what rate, any restrictions etc. This probably applies only if you stay in the With profits fund. Whether or not it's worth keeping will depend on various factors.

Dead_Eye_Jones

I contracted out on the basis that Id rather look after the money then leave it with the government ! Whether it is the right decision or not only time will tell, I think only you can really decide.

Deals_2

could you explain in more details how this works exactly and dont really have an understanding of this.thanks in advance

Dead_Eye_Jones wrote:

I contracted out on the basis that Id rather look after the money then leave it with the government ! Whether it is the right decision or not only time will tell, I think only you can really decide.

Deals_2

could you explain in more details how this works exactly and dont really have an understanding of this.thanks in advance

Dead_Eye_Jones wrote:

I contracted out on the basis that Id rather look after the money then leave it with the government ! Whether it is the right decision or not only time will tell, I think only you can really decide.

dunstonh

The Govt could abolish SERPS/S2P overnight. They have already reduced the benefits three times retrospectively to those contracted in but not to those that have contracted out. The increase in state retirement ages to 66,67 and then 68 is also a reduction in benefits as well as you have to wait upto 3 years more to get the payment (unlike contracted out which can be taken from age 55 from 2010).

At one point a few years ago, it looked like a single state pension was on the cards. If this had happened, everyone that was contracted in would be worse off than those that contracted out. Those that had contracted out would have kept their money. Those that contracted in would have lost their accrued benefits. A single state pension is still a goal for some MPs.

So, on the one hand you have the Govt able to adjust and remove benefits as they see fit. That is the legislative risk. On the other hand you have contracted out benefits invested and that has investment risk.

There is no risk free option with contracting in or out. Its a case of which risk you feel happier with. Dead Eye Jones appears to prefer the bird in the hand rather than the two in the bush.

Deals_2

understand a bit better now though i wonder where would be the best place to read up on a regular basis about these things ot have a good understanding (then easier to be in control). or any good books worth recommending? or website? thanks