Pension Mess - Not sure What to do

cosmicDolphin

To be honest I've pretty much stuck my head in the sand when it comes to my pension.

I opted out of SERPS in 1988 aged 18 because everyone seemed to think it was a good idea at the time - not so sure now. Unfortunately I have an Equitable Life With Profits Policy , and although I initially used to contribute to it myself I stopped doing so many years ago when I left home and needed every penny to pay the mortgage and buy food. Ever since I've just left it it's own devices and not really kept track of where it's at.

Sometime in the early 2000's I joined the Final Salary Scheme of my employer at the time ( Dixons Store Group ) called DRESS. I left the company about 3yrs later, and believe it's frozen.

As far as I know I'm still opted out of SERPS, I've never opted back in myself.

I feel everything is a bit of a mess and not really sure what to do for the best. I am aged 42 now BTW

Specifically, should I :-

Transfer out of Equitable Life or leave it there.

Start another Personal Pension

Opt back in to SERPs (i've read a few other threads about people being opted back in automatically )

Or just follow my natural inclination to do nothing, and wait to be automatically enrolled to a new pension knowing I have approx 25 yrs of working left to build it up.

Any suggestions much appreciated !

ajbell

i have often wondered whether opting in and out of SERPs was automatic depending on if you are paying into a private pension or not.

jem16

cosmicDolphin wrote: »

I opted out of SERPS in 1988 aged 18 because everyone seemed to think it was a good idea at the time - not so sure now.

It's more than likely to have been the correct decision to contract out of SERPS. All depends on what you invested in though. Why do you think it was not a good decision?

Sometime in the early 2000's I joined the Final Salary Scheme of my employer at the time ( Dixons Store Group ) called DRESS. I left the company about 3yrs later, and believe it's frozen.

A final salary pension would be contracted out so that would take precedence over the personal pension.

Your final salary pension will be deferred, not frozen. It's still growing in line with inflation.

As far as I know I'm still opted out of SERPS, I've never opted back in myself.

So where are your contributions going?

Opt back in to SERPs (i've read a few other threads about people being opted back in automatically )

Unless you are currently in a final salary pension, you have been automatically contracted back in since April 2012.

Or just follow my natural inclination to do nothing, and wait to be automatically enrolled to a new pension knowing I have approx 25 yrs of working left to build it up.

Any suggestions much appreciated !

I assume your current employer has not offered a pension?

jem16

ajbell wrote: »

i have often wondered whether opting in and out of SERPs was automatic depending on if you are paying into a private pension or not.

Contracting out ( not opting out - that's something completely different) was not automatic except for occupational schemes where it's part of the scheme.

xylophone

What is the current state of play with your Equitable Life policy? Have you not had annual statements?
Except for defined benefits pension schemes, contracting out has now ended. http://www.pensionsadvisoryservice.org.uk/workplace-pension-schemes/final-salary-schemes/contracting-out-of-serpss2p

DRESS http://www.dixonsretail-retirement-options.co.uk you would almost certainly be ill advised to do anything other than leave this where it is.

I take it that you have had no occupational pension since leaving Dixons.

You can ask for a State pension statement http://www.direct.gov.uk/en/Pensionsandretirementplanning/StatePension/StatePensionforecast/DG_10014008

When will your current employer introduce a pension scheme?

dunstonh

I opted out of SERPS in 1988 aged 18 because everyone seemed to think it was a good idea at the time - not so sure now.

You contracted out of SERPS (opt out is something people do when they dont join an occupational pension. Its a common error). At 18 you were right at the best age to be contracted out.

Sometime in the early 2000's I joined the Final Salary Scheme of my employer at the time ( Dixons Store Group ) called DRESS. I left the company about 3yrs later, and believe it's frozen.

That would likely be a contracted out scheme. If so, it would have taken priority over the personal pension. So, for that period, no rebates would be paid to the personal pension.

As far as I know I'm still opted out of SERPS, I've never opted back in myself.

You are not. Contracting out was abolished in April 2012.

Transfer out of Equitable Life or leave it there.

would require an analysis of what you have vs alternatives. Not something we can answer without that being done.

Start another Personal Pension

You cant restart Eq life plans. So, that is one option you can rule out. Staring another one is an option (of a few) that you can rule in.

Or just follow my natural inclination to do nothing, and wait to be automatically enrolled to a new pension knowing I have approx 25 yrs of working left to build it up.

25 years is not very long and it could be until 2017 before your employer has to offer a scheme. Therefore leaving you 20 years.

cosmicDolphin

Thanks for all your responses. I've done a little more digging through the paperwork I have so here are some more details:-

I contracted out of SERPS in June 1989 aged 19yrs & 3 months and started my Equitable Life policy.

I have the most recent statement received in March this year for 2011. here is a summary of what it says:-

With Profits Investments: Value of G'teed benefits on 31/12/11

£8001 ( transfer value £ 7,370 )

Unit linked Investments : Bid value on 31/12/11

£10,378 ( transfer value £10,378 )

Protected rights investments included in these values

With Profits £4,856 Unit Linked £6150

There's an illustration at the end - What you might get at 60

Estimated value of the Non-Protected Rights Payments paid into your plan £8,200

Giving and estimated taxable monthly pension of £21

Estimated value of the Protected Rights Payments paind into your plan £12,200

Giving an estimated taxable monthly pension of £30

---

I haven't had an occupational pension since I left the DRESS scheme with Dixons, I have found the letter they sent me in 2006 when I left which offered wither a defferred pension at 65 or to transfer out. My deferred pension amounts to £1793 per annum and there is an estimate that in 2035 aged aged 65 it will be a minimum of £1793 up to a maximum of £7031.

My current employer is a smaller company which doesn't have a pension scheme. It employs about 100 people and turns over approx £7m . I'm not sure when they will have to enrol staff into a pension but knowing the management they will leave it as long as they possibly can.

I have a wife who is a stay at home parent and we have 3 children aged 3 to 11. Moved house 12 months ago after paying down our £80k mortgage with the One Account to £40k over 8 yrs. Now back up to £125k in the new house with a LTV of around 65%.

No savings as such due to the one Account, but do have a policy with Family investments for each of the Kids.

Income was £38k last year but it can vary with Sales Commission etc. Didn't have any cash spare in our 1st year here due to various things need doing to the property ( bit of a money pit at the mo ! )

Hope that gives a better idea of where I'm at and suggestions for what I should do next.

atush

I know you invest in the One Account, but how mich of this is cash you can get out quickly?

have you got any ISAs?

You do need to address your lack of pension soon, but I am also concerned about lack of other investments outside of your main property. I would consider investing in Isas (S&S if you have enough ready cash in your one acct) alongside a personal pension.

will your OH be going back to work once the 3 yr old goes to school at 4? that could provide some extra income for pension savings.

cosmicDolphin

atush wrote: »

I know you invest in the One Account, but how mich of this is cash you can get out quickly?

have you got any ISAs?

You do need to address your lack of pension soon, but I am also concerned about lack of other investments outside of your main property. I would consider investing in Isas (S&S if you have enough ready cash in your one acct) alongside a personal pension.

will your OH be going back to work once the 3 yr old goes to school at 4? that could provide some extra income for pension savings.

Hi Atush

Having jumped a couple of the rungs up the property ladder 12 months ago we are pretty close to our the top end of our 'facility' on the One Account so there's currently little or no breathing space to withdraw any cash.

I cashed in all the other savings we had when we switched to the One Account as the interest saved by paying down the mortgage outweighed any benefits from savings. I haven't done the sums lately but I think it still holds true.

We don't plan on sending our youngest to school at 4yrs old. The older two were home educated by my wife until 7 & 10 for a variety of reasons but it worked well for us.

xylophone

Before considering the pension, what insurance do you have in place to protect your wife and children (and repay the mortgage) in the event of your death/permanent incapacity?

With regard to the Equitable Life Policy, protected rights are no more. http://www.direct.gov.uk/prod_consum_dg/groups/dg_digitalassets/@dg/@en/@over50/documents/digitalasset/dg_195031.pdf

Ask EL how this affects your benefits.

Get your State Pension statement (see previous). http://www.pensionsadvisoryservice.org.uk/state-pensions/national-insurance-credits - for your wife.

Have you saved an emergency fund?

Have you asked your employer about a pension scheme?
See http://www.nilgosc.org.uk/Circular%2002.2010/TPRFSAGuideForEmployers.pdf

cosmicDolphin

Hi Xylophone

I don't have any form of insurance, never have had. Not ever taken any form of PPI / Mortgage Protection Etc. I know lots of people do but I always thought I'd rather take the small risk. I was covered for death in service during my membership of DRESS but that was the only time.

I went to the link for my State Pension statement but it is closed at the moment, so will have to do that in the week when it re-opens.

Haven't saved an Emergency fund. We used to have plenty of spare 'facility' ( about £30k) with our One Account before we moved to this house house but not now.

I have mentioned a pension to my Director. He's a bit of an Eccentric to be fair and just laughed it off, and said I'd be better paying down my mortgage. He gives us lots of fringe benefits like interest free loans, use of the corporate seats at the football, use of his cottage in the Lake District and his villa in Puerto banus.