Contracting out of SERPS

rorysdad

Hi

I am 53 years of age. Many years ago I seem to recall that whilst in employment I contracted our of SERPS. Loads were doing it at the time. I never paid a penny out of my wages etc as far as I am aware.

I saw an advert for the Prudential and it got me to thinking that was who had dealt with the contracting out. I wrote to them and they sent me a letter saying they had someone with my name on their system - they sent forms and I had to fill in all the addresses I had lived at over the years - and there were lots of them as I had moved alot!

Heard nothing for about 3 months and then received a large envelope from Prudential which seems to show that I in fact have a pension with them worth £44,000.

I am assuming this is from contracting out.

The letter says I can draw the pension in 2 years time when I am 55.

Can I draw it all at in one go then?

Does this sound correct? What effect does this have on my State Pension entitlement when I am 60 - someone has said I won't get it!!?

Thanks.

RD

molerat

State pension when you are 60 - in your dreams maybe !, 67 is your current SPA. You will get a SP, it is not going away ....... yet.

A few threads on here about this. In April 2016 you will be given a "foundation amount" based on the higher of the current system or the new system. The new system figure will have a deduction for the period you were contracted out. Going forward you will earn approx £4.15 pension per week for each year you contribute up to the maximum £148 (current rates).

rorysdad

Thanks Molerat

I mean't 65, not 60!!

So, I will get SP as you state - and will I be able to draw the contracted out £44K all in one go or will I have to take a percentage plus an annuity?

RD

kidmugsy

rorysdad wrote: »

will I be able to draw the contracted out £44K all in one go or will I have to take a percentage plus an annuity?

You'll be able to take 25% of it in one go, tax-free. Any more you take out will be subject to income tax, so it would be wise to spread it over more than one year to reduce your tax bill.

There's no compulsion to buy an annuity - in fact there hasn't been for years.

xylophone

https://www.hl.co.uk/partners/search/new-pension-rules-changes-2015?theSource=PCGSI&Override=1&adg=G+SIPPENI+BDG&gclid=COPnnOvz5MMCFY_MtAodIXUAmQ

The booklet might be worth a read.

http://www.thisismoney.co.uk/money/pensions/article-2941283/Pension-freedom-triumph-disaster-making.html

Re new state pension https://www.gov.uk/new-state-pension/overview