Pleasantly surprised by pension forecast - it can't be right!

bigfreddiel

missbiggles1 wrote: »

My pension was over 40% higher than I was expecting - lots of people don't appreciate the amount you get through SERPS/S2P.

I was told to contract out, into a private pension that the company contributed into as well as me. I was so green I didn't realise how extortionate the Abbey Life fees and charges were They were very well hidden! At the end of the day this along with two other small pensions were transferred into the civil service classic scheme and bout me an extra 10 years service equivalent, which was about the number of years they actually covered. So it turned out okay and I still have enough SERPS/S2P to bring my SP up to £154/week.

With hindsight I should have just left myself contracted in but you're young and gullible, and when you're offered a new deal you think it must be better. Now with my old cynical head on I think, what's the catch! They wouldn't be offering you anything better for nothing.

Similar thing happened with the civil service scheme about 12 years ago, they offered a new deal that cost a bit more than the classic scheme. It may have worked out better, but I stuck with classic on the basis they wouldn't offer anything better without any cost to us. I may have been wrong, I may have been right, but I'm happy with the outcome.

Cheers fj

missbiggles1

bigfreddiel wrote: »

I was told to contract out, into a private pension that the company contributed into as well as me. I was so green I didn't realise how extortionate the Abbey Life fees and charges were They were very well hidden! At the end of the day this along with two other small pensions were transferred into the civil service classic scheme and bout me an extra 10 years service equivalent, which was about the number of years they actually covered. So it turned out okay and I still have enough SERPS/S2P to bring my SP up to £154/week.

With hindsight I should have just left myself contracted in but you're young and gullible, and when you're offered a new deal you think it must be better. Now with my old cynical head on I think, what's the catch! They wouldn't be offering you anything better for nothing.

Similar thing happened with the civil service scheme about 12 years ago, they offered a new deal that cost a bit more than the classic scheme. It may have worked out better, but I stuck with classic on the basis they wouldn't offer anything better without any cost to us. I may have been wrong, I may have been right, but I'm happy with the outcome.

Cheers fj

I had several jobs where I was contracted out but left within two years so took out my pension contributions when I went - I was doing this right into my mid 30s:o. I'm not going to work out whether I'd have been better off leaving them in (teaching and local government) because it's too late now, but it did mean that I got an extra £70 pw SRP (oops, much more than 40% extra) on top of my teachers pension from when I was older and wiser.

Kynthia

bigfreddiel wrote: »

I was told to contract out, into a private pension that the company contributed into as well as me. I was so green I didn't realise how extortionate the Abbey Life fees and charges were They were very well hidden! At the end of the day this along with two other small pensions were transferred into the civil service classic scheme and bout me an extra 10 years service equivalent, which was about the number of years they actually covered. So it turned out okay and I still have enough SERPS/S2P to bring my SP up to £154/week.

With hindsight I should have just left myself contracted in but you're young and gullible, and when you're offered a new deal you think it must be better. Now with my old cynical head on I think, what's the catch! They wouldn't be offering you anything better for nothing.

Similar thing happened with the civil service scheme about 12 years ago, they offered a new deal that cost a bit more than the classic scheme. It may have worked out better, but I stuck with classic on the basis they wouldn't offer anything better without any cost to us. I may have been wrong, I may have been right, but I'm happy with the outcome.

Cheers fj

If you're talking about in 2002 when you could move from Classic to Premium I find your assumptions strange. There were lots of briefings at the time that made it clear to me where I worked that it was slightly better and it did cost more. There was nothing hidden if you read the material. Therefore you had the choice rather than be moved automatically like they've done now with Alpha. I do wonder how many in Classic don't realise their pension only pays out to a spouse rather than an unmarried partner?

bigfreddiel

Kynthia wrote: »

If you're talking about in 2002 when you could move from Classic to Premium I find your assumptions strange. There were lots of briefings at the time that made it clear to me where I worked that it was slightly better and it did cost more. There was nothing hidden if you read the material. Therefore you had the choice rather than be moved automatically like they've done now with Alpha. I do wonder how many in Classic don't realise their pension only pays out to a spouse rather than an unmarried partner?

Well that's not a problem, I'm married, and yes we did have plenty of briefings, plenty of literature, but I had only been in the scheme for two years, and wasn't sure how long I was staying in the job. Even then I was really ignorant on pensions, thus my suspicion on thinking the new offers couldn't be better. I know it's totally irrational and I may have been better off if I had moved to classic plus or the the other schemes which names I have forgotten. But didn't the other scheme have no lump sum, converted classic to the new scheme so you had less years equivalent service. You contributed more, but on a positive front it was a 60ths scheme as opposed to the classic being an 80th scheme.

Anyway you make choices or in my case you don't, and it's all come out right for me, happy with my pension and lump sum.

Cheers fj

greenglide

I was told to contract out, into a private pension that the company contributed into as well as me. I was so green I didn't realise how extortionate the Abbey Life fees and charges were They were very well hidden! At the end of the day this along with two other small pensions were transferred into the civil service classic scheme and bout me an extra 10 years service equivalent, which was about the number of years they actually covered. So it turned out okay and I still have enough SERPS/S2P to bring my SP up to £154/week.

It is almost certain that you would have had to leave the employers pension scheme if you didn't want to be contracted out. Since this would have meant losing the employers contribution this would probably have been a bad move.

If these DC schemes bought you 10 years service in the civil service scheme they were obviously valuable. When I transferred previous contributions in LGPS many years ago they didn't get me anything that much service:(

kidmugsy

missbiggles1 wrote: »

My pension was over 40% higher than I was expecting - lots of people don't appreciate the amount you get through SERPS/S2P.

Oh don't missbiggles. You'll just attract some outraged twerp who spent much of his career contracted out and will whine that it's just not fair that you get a bigger state pension than he does.

kidmugsy

missbiggles1 wrote: »

I had several jobs where ... took out my pension contributions when I went ... I'm not going to work out whether I'd have been better off leaving them in

A pal of mine did that twice (it may have been easier to do in the early seventies): she used the money as a deposit on a house. She is well satisfied with the result.

bigfreddiel

kidmugsy wrote: »

Oh don't missbiggles. You'll just attract some outraged twerp who spent much of his career contracted out and will whine that it's just not fair that you get a bigger state pension than he does.

I've come across this, just tell them they have paid less NI. That usually causes something like "yes, but, it's still not fair", so just ask why it's not fair, pay less, get less. They get the message eventually

fj

GunJack

Kynthia wrote: »

If you're talking about in 2002 when you could move from Classic to Premium I find your assumptions strange. There were lots of briefings at the time that made it clear to me where I worked that it was slightly better and it did cost more. There was nothing hidden if you read the material. Therefore you had the choice rather than be moved automatically like they've done now with Alpha. I do wonder how many in Classic don't realise their pension only pays out to a spouse rather than an unmarried partner?

I have 20 yrs deferred in Classic up to 2007, and I remember the transition to Premium well - when I worked out what it would have cost to move to Premium (3.5% compared to 1.5% in Classic) it just wasn't worth it, especially as 1 year in Classic was only worth something like 0.8 years to transfer into Premium...

Kynthia

GunJack wrote: »

I have 20 yrs deferred in Classic up to 2007, and I remember the transition to Premium well - when I worked out what it would have cost to move to Premium (3.5% compared to 1.5% in Classic) it just wasn't worth it, especially as 1 year in Classic was only worth something like 0.8 years to transfer into Premium...

You made an informed choice with the info at the time, which is all we can do. I just thought it was strange that someone would assume they would be worse off if they took something offered rather than research it.


I joined Premium when I barely had any service yet, but it seemed the more modern scheme as you didn't need to be married to your partner (which at the time seemed fairer to gay couples as it was pre-civil partnerships) and didn't stop paying out to your partner should they cohabit or remarry. Plus it paid 60ths of your final salary rather than 80ths and went back much further to find your best salary. Yes it cost more and didn't have a lump sum, but in my 20s I wouldn't have put away what I saved into additional pension and you can purchase a lump sum if you really want one. I'm still trying to wrap my head around Alpha but waiting until state pension age for it isn't great.