Norwich Union Opt Back In To SERPS

EMcG

I have just heard that Norwich Union is going to opt back in to SERPS all of its clients that have opted out.

Does anybody have an further information on this?

Many thanks

payless

Whilst not my "field" can't say I heard anything about a complusion (Yet) - i would be surprised if they do anything more than suggest people review their position.

perhaps more in this weeks "trade papers" on Thursday

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http://uk.biz.yahoo.com/050507/17/fiacs.html

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Above will be more aimed at those with personal / stakeholder pensions, rather than company schemes





mentions

EdInvestor

You can choose to stay contracted out if you like, it's up to you.

But Moneysavers should realise that the money paid into the pension while it was contracted out will stay in that pension: so it's a good idea to check what fund the pension is invested in and what charges you are paying and move to a better performing, lower cost fund if appropriate. This does not need to be a big hassle

dunstonh

NU are doing what most other providers have already done. If you are in low potential growth funds, they are automatically contracting you back in.

Those in property/equity unit linked funds have high enough potential to still remain contracted out. The main focus is, of course, on with profits pension funds which do not realistically have that potential.

isasmurf

Norwich Union Press Release

State pensions: To contract out or not? (Reuters)
Contract out and now contract in (IFAOnline)
Insurer returns to state pension(BBC)

I think that's enough for now.

paul2468

I earn aprox £16500 pa and i contracted out of serps 10 years ago with the Abbey , would i lose much by contracting back in or would i be in the same position as somebody who never contracted out ?

dunstonh

It depends on what you are after paul.

NU are doing this only on cases where they provided the advice. You could say that they are protecting their backsides more than perhaps doing it for the good of the client.

Under current proposals to come in april 2006, if you contract out, you will be able to take the fund benefits from age 50 (55 from 2010). You will also be able to take a tax free lump sum of 25%. If you contract in, your contracted in benefits will not have any tax free lump sum and have to match state retirement age, whatever that ends up being in the future.

Financially, if you contract out and invest in med/high potential funds, you will potentially end up with more or less the same as if you contract in. If you invest in low potential funds, you will get back less income. Although you may see the early retirement age benefits and tax free lump sum as being more beneficial.

EdInvestor

I've also heard the Government is considering paying higher rebates into contracted out pensions, which would help.

IMHO having a contracted out pension could be a useful standby in future if you end up with an "unplanned" early retirement, before your state pension is due.These things do happen But as DH says, you must invest the money properly, otherwise you will lose out.

dunstonh

Yes, i read something a few months back that said they were looking into increasing the rebate again.

The idea of the S2P (SERPS) and contracting out was to reduce the burden on the state in future years. It cost the Govt now by having to pay millions to insurance companies each year but it did mean that the Govt didnt have to pay it later. However, in typical Labour style, they reduced the rebate making it less attractive to contract out forcing lots of insurers to contract people back in again. Therefore costing the Govt less now but a lot more in the future. Putting it off until it is someone elses problem.

Paul_Herring

dunstonh wrote:

Yes, i read something a few months back that said they were looking into increasing the rebate again.

Got a reference for this please (or indeed anything related to rebate levels)? - I don't appear to be having much luck with Google trying to find 'owt, and the search function on the DWP's site isn't working from here either.

dunstonh

http://www.moneymarketing.co.uk/cgi-bin/item.cgi?id=98241&d=pnd&h=pndh&f=pndf

That was back in January but nothing new since.