How do we opt back into SERPS

BigGarner

When I was around 18, I started a personal pension with GAN (now Windsor Life) and I chose to 'Opt Out' of the state pension which would then be paid into my personal pension. I then was made unemployed and had to stop the personal pension. I still receive statements from Windsor Life regarding the amount in the plan.

My question is this, as I opted out of the state pension and now that my personal pension has stopped, how do I stand now with the state pension?

Thanks for any advice.

dunstonh

My question is this, as I opted out of the state pension and now that my personal pension has stopped, how do I stand now with the state pension?

You have not opted out of the state pension. It is not possible to do so.

You opted out of SERPS (and what is now referred to as the second state pension). Instead of the state giving you a second state pension, the insurance company will pay you based on the rebate paid to them by the Govt and how much it grows by.

Your personal contributions went into the ordinary rights pot wtih Windsor life. Your contracted out rebates went into the protected rights pot with Windsor life. Stopping your personal contribituions would have no impact on the contracted out rebate.

However, once you became unemployed, you were no longer paying any NI and therefore there was not any NI to rebate into the personal pension. If you are still unemployed (or self employed), then that remains the case. If you are employed again then the rebates would start being paid again unless you have contracted back in.

None of this has any impact on the basic state pension.

EdInvestor

You should review that old pension with the aim of moving it as it probably has high charges, penalties and may well be performing poorly.

djm1972

Whilst there is oodles of information about "opting out" of S2P on the net, there is almost nothing about "What if", and the effect that opting out has going forward. If you just joined a company, opted out, and had that job for life and just one pension then everything would be rosy. But life is rarely like that these days!

I joined my employer's opted out scheme when I first left university. After 5 years, I left that company; keeping a deferred pension.

Since then, I have not joined any subsequent schemes, but I read recently that "If you have contracted out of S2P but never opted back in, then you will STILL be opted out!" :eek:

Since leaving i've had other jobs and just paid NI as "normal", but I have no idea and cannot find out anywhere if this decision to join a contracted out scheme years ago is still having consequences today.

In summary: I have a deferred contracted out pension. Where on earth does that leave me now with regards to future NI contributions and S2P?

EdInvestor

To find out if you are contracted out or in, contact these people:

https://www.thepensionservice.gov.uk

It's most likely you were opted back in when you left the original scheme.

dunstonh

I joined my employer's opted out scheme when I first left university. After 5 years, I left that company; keeping a deferred pension.

That isnt the same as opting out of S2P by using a personal pension though.

Since then, I have not joined any subsequent schemes, but I read recently that "If you have contracted out of S2P but never opted back in, then you will STILL be opted out!" :eek:

Again, only applies to personal pensions.

Where on earth does that leave me now with regards to future NI contributions and S2P?

If you have never contracted out using a personal pension (or stakeholder) then you are not contracted out.

djm1972

So....

When you stop contributing to a contracted out scheme (i.e. by leaving the company) you ARE AUTOMATICALLY opted "back in" to S2P?

So why have I been reading scare stories on the web saying that you may still be "contracted out" because of a decision you made years ago unless you have completed some form or other to "opt back in"?

dunstonh

When you stop contributing to a contracted out scheme (i.e. by leaving the company) you ARE AUTOMATICALLY opted "back in" to S2P?

Only final salary schemes. Not money purchase.

So why have I been reading scare stories on the web saying that you may still be "contracted out" because of a decision you made years ago unless you have completed some form or other to "opt back in"?

Either you are not reading the stories correctly or those writing such comments are wrong.

If you contract out using a personal pension, you remain contracted out each year until you contract back in again.

Not sure why you are calling them scare stories though. Contracting out can be highly beneficial and some of the options are far more favourable than contracting in.

EdInvestor

The confusion arises because there are so many different types of pensions with different rules attached. :rolleyes: