Confused about SERPS

Sunshine_and_Roses

When I was 17/18 back in 1990, I was on sick leave from a YTS scheme for a few months.  In that time I had a visit from a Barclays Bank representative who advised me to contract out of SERPS and set up a personal pension scheme which the government would pay into while I was on sick leave.  I took their advice and set up the scheme, but did not pay any premiums myself.  I have since paid into a Royal Mail pension for 10 years and Local Government for 15 years, both at 1/60 which are now deferred.  I have an Aviva pension which was a workplace pension paid into for a year, and a NOW workplace pension which I have been paying into for a few months.
Did I do the right thing in 1990 contracting out of SERPS, will this impact on my pension in the future and is there anything I should be doing regarding this?

georgehere

"I took their advice and set up the scheme, but did not pay any premiums myself."
You need to track down the 'scheme' ... there are a couple of routes: call HMRC and ask if they know where your contracted out payments from 1990 went to (ask for the details from your NI records) / any paperwork from Barclays filed away.
Once you find it, you can contact the provider and see what it is worth now.
Also get your up to date State Pension forecast and see if you are happy with it and where it is projected to end up.

Sunshine_and_Roses

georgehere said:

"I took their advice and set up the scheme, but did not pay any premiums myself."
You need to track down the 'scheme' ... there are a couple of routes: call HMRC and ask if they know where your contracted out payments from 1990 went to (ask for the details from your NI records) / any paperwork from Barclays filed away.
Once you find it, you can contact the provider and see what it is worth now.
Also get your up to date State Pension forecast and see if you are happy with it and where it is projected to end up.

Thanks for your reply.  I have most of the paperwork, Barclays transferred the pension to Reassure.  The current value at June 2019 is £3081.05, which would be £211 annually when I am 65.

gm0

Thoughts from fellow consumer not an IFA.

Regarding that event. Probably not.  

Getting a State Pension forecast by registering on the official site and understanding where you are on the new state pension rules would be a good step to understand overall position.   Your main pensions are clearly RM 10/60 and LG 15/60 and then State Pension and the other three smaller pots - personal/aviva/now.

At the time 1990 contracting out of SERPS was a fairly mainstream thing to do .  I did it too. 
A lot of employers pushed it with the bulk of employees.  Your situation with sick leave is a bit different to that but the bar to being "missold" contracting out of SERPS back then is pretty high.  First there needs to be actual harm - and directly caused by the decision to do it being bad advice for you. And proof of that. The rules then to protect you were rather different (weaker) also.  Most people who saved a pension outside SERPS with the diverted NI contributions are better of for it although there are always exceptions (some caused by scheme, charges, chopping/changing investments, bad timing - again not necessarily things that relate to the decision to move across from SERPS and thus still not harm/misselling just a poor value scheme).  In aggregate and given likely value of a few months NI alone this is why I speculate "probably not". 

Hopefully the worst case now there is a small pot with the promised sick leave NI contribs in it (I am sorry I don't understand the rules of that or how it was triggered so can't help understand that).  Or nothing if the "promise" was wrong or not implemented for some reason to do with your circumstances. Even though you didn't make any contributions yourself.  it is still worth tracking the personal pension down to find out what if anything is in it.  A few months NI credits alone won't amount to a great deal although depending upon what it was invested in it may have shown some growth net fees over 30 years since then.  Barclays will have taken their cut which could be quite a bit.  Worth finding.  An adviser (a grey haired one anyway) would know how this worked back then.

Contracting out of SERPS as a trend reversed with later government rule changes and many people contracted back in.  (My employer scheme did it).  Again generally not controversial - rules changed, balance of benefit shifted back. 
Later again the new state pension happened and SERPS was phased out. For anyone retiring from now on New State Pension rules (without SERPS) apply (based on my understanding).  What matters now is qualifying employment years for the full SP i.e. years where your employment paid enough NI and this was reported to government accurately (by employer) and went on your file.

When you see your SP forecast there will be some details on periods spent contracted out and where the assumption was the employer and you were saving "addiitonal pension" in an occupational or personal pension rather than the government version.  This should be checked to see if it matches up with what you think happened in terms of major periods of employment and any other "credits" from sickness, not working but in receipt of child benefit etc. SP forecast has to cater for everyone so it covers old rules and new showing the interplay which is confusing to most of us not involved in special transitional rules.

I would track down the personal pension and see what is in it.  And get the SP forecast.
Understand the future benefits (ages, amounts, indexation) from your main PO and LG pensions.  With those and SP you will have enough to understand your income shape vs age in retirement. The smaller "funds" may be helpful in bridging to the retirement ages where you draw each one if your desire to reduce work and the retirement ages don't line up as you would like.

Good luck with working through this.

Linton

As you would have been contracted out of SERPs whilst paying into your DB pensions anyway, the effect of your short time contracted out through choice would be minimal.

Sunshine_and_Roses

Thanks all.  I have been trying to check my SP but locked myself out so will need to try again tomorrow,

Albermarle

Although the pension pot now with REassure is actually just the same as the ones you have with Aviva and NOW.
The fact it was originally part of  a SERPS opt out plan is not relevant to its current status.
In this case you could consider transferring it out to one of the other pensions you have. As it is an old pension there will probably be some restrictions on how you can access it and would be better to transfer it to a more modern plan .Also the charges might be lower, although on a sum this size charges are not such a big issue.

jo.anne

I contracted out of SERPS in 1987, not sure for how long but I receive a statement each year from Reassure and the money is invested in "managed pension accumulator Series 03 (managed).I am 49 years old and the amount held is £7593.15. Nothing has been paid for a considerable time and my last statement showed a policy charge of £123.13 not sure if this is a one time deduction or if it is taken annually. Pensions are a too difficult to understand but want advice if it is safe to stay with them or is there an option to change to somewhere better?

Albermarle

jo.anne said:

I contracted out of SERPS in 1987, not sure for how long but I receive a statement each year from Reassure and the money is invested in "managed pension accumulator Series 03 (managed).I am 49 years old and the amount held is £7593.15. Nothing has been paid for a considerable time and my last statement showed a policy charge of £123.13 not sure if this is a one time deduction or if it is taken annually. Pensions are a too difficult to understand but want advice if it is safe to stay with them or is there an option to change to somewhere better?

Although there are no contributions going in , your money is still invested ( and growing hopefully) so there is a charge for the investment , usually a fix % pa .
The money is safe /not going to disappear overnight . You could transfer it but being honest,  it is such a small amount in pension terms it probably will not make much difference one way or the other . Do you have another existing pension ?

This is the Govt website for pensions and could be some good bedtime reading
https://www.pensionsadvisoryservice.org.uk/

Marcon

jo.anne said:

I contracted out of SERPS in 1987, not sure for how long but I receive a statement each year from Reassure and the money is invested in "managed pension accumulator Series 03 (managed).I am 49 years old and the amount held is £7593.15. Nothing has been paid for a considerable time and my last statement showed a policy charge of £123.13 not sure if this is a one time deduction or if it is taken annually. Pensions are a too difficult to understand but want advice if it is safe to stay with them or is there an option to change to somewhere better?

There'll be an annual management charge and if you can force yourself to stagger through the paperwork again, it should tell you that.