SERPS / S2P and a phantom personal pension.

Johnboy211

Hi Everyone,

I'm new here so please be gentle...

I've just contacted HMRC to understand whether I am contracted in or out for S2P and to understand my previous status over the years. The helpful chap explained that I have always been contracted out which sort of surprised me.

I started paying into a defined benefit occupational pension scheme back in 1992 at the tender age of 19. This continued up to 2005 and it is clear that I was contracted out of SERPS / S2P during this period. After 2005, my new employer's defined contribution pension is clearly not contracted out, so I expected the HMRC records to show that I was contributing to S2P from 2005 to the present day.

However this is not the case. The records show that in addition to the contracted out status with my occupational pension schemes, I have also been contracted out to a private pension scheme operated by Laurention Life, who I understand are now owned by Sun Life of Canada. Before 2005, the contracted out status priority was to my occupational scheme, but it seems that after 2005 any NI rebates i.l.o S2P has been paid to this company.

I do remember an IFA selling me a private pension back in 1992 which I cancelled during the 14 day cooling off period when I opted to go with the company scheme instead. It seems that although the direct debit for payments to this pension was cancelled, the policy is still live and has been receiving contributions from HMRC since 2005.

Does this sound unusual? And is it a good thing that I have another pension of sorts that I knew nothing about? Or would it have been better for these NI contributions to be building up S2P? I've been a higher rate taxpayer since about 1998 if that makes any difference.

Sorry for the length of this post (I promise I'll make future one much shorter!), but any advice would help.

Thanks in advance.

dunstonh

Does this sound unusual?

Not really. In 1992, you would have had two pensions. One for the regular contribution and another called an appropriate personal pension plan. It sounds like you cancelled the PPP but not the APPP (it would require two cancellation forms)

And is it a good thing that I have another pension of sorts that I knew nothing about?

it doesnt really make much difference. Its not as if the amount will be much for just 7 years contracting out. You would either get benefit from contracting in or benefit from contracting it. Its generally regarded as cost neutral. So, its not really made any difference overall.

Or would it have been better for these NI contributions to be building up S2P? I've been a higher rate taxpayer since about 1998 if that makes any difference.

You are still under the pivotal age (43-45 typically) where contracting out is typically better than contracting in. Your income certainly makes it more likely to be beneficial

xylophone

You are now in a DC scheme?
http://www.direct.gov.uk/prod_consum_dg/groups/dg_digitalassets/@dg/@en/@over50/documents/digitalasset/dg_195031.pdf
is this relevant to your situation?

Johnboy211

Thanks Xylophone, I rather think it does apply to me. Looks like I'm going to have 7 years of NI rebates sitting all alone in a personal pension that I didnt realise existed.

As dunstonh has pointed out though, I'm sure the amount is pretty negligible. Probably not worth losing any sleep over!

Thank you both for your help.

xylophone

I'm sure the amount is pretty negligible

Why not contact Laurentian Life?(Sun Life) http://www.sloc.co.uk/static/slfuk/files/performancetables/SL2021.pdf

Would it be possible to transfer/worthwhile to transfer it to your existing scheme?

Johnboy211

Yes, all in hand. I spoke to them earlier but as their records are a little vague (no contact in 19 years) they are keen for me to fill out a form to update them before I can find out what is contained in the account. After that I will speak to my current DC pension provider to see if it's worth trying to transfer it (I'm guessing there will be a substantial fee for this).