Contracting out and back in, SERPS, S2P and New State Pension

SomeMadeUpName

Another question please to those who know:

In 1993 I contracted out of SERPS into a approved Personal Pension.  I was paying a fair bit of NI, in fact between 2000 and 2004 the max as I overpayed and HMRC NI would send me a refund cheque.  Over 11 years from '93 to '04 NI diverted to plan was about £14.5k.  From about 2002 after S2P was brought in I was getting letters from the provider saying they reckoned I should opt back in to S2P, but I preferred the money in my own defined pot and ignored them. In 2004 the provider wrote and said we still reckon you'll be better in state and so as trustees we will opt you back in.  I didn't object (even though I didn't really want to go back in) and they did, contributions to my pot stopped and went to S2P instead.  2005 to 2007 I still maxed out NI, 2007 to 2015 I paid less (no more refunds for sure) but I think probably paid some towards S2P, 2015 on I've been basic low NI.  Once New State Pension kicked in in 2016 my entitlement was still below the max New State Pension at that time so I was able to contribute more years and now will get the £179 (or applicable at the time).

Trouble is, if I'ld stayed contracted out in 2004 and onward my external pot would be bigger, my figure in 2016 would have been lower, but I would still have got to max New State Pension.

So have I any reasonable right to complain that they took a decision for me, that worked out to cost me money?  Or am I shot in the foot by any or all of the following:
I could have objected and didn't.
They took what was probably a reasonable decision at the time (albeit not the one I would have taken if they left it to me).
My ability to get up to max New State Pension is actually a gain for me, the fact it could have been a bigger gain is not the same as a loss.

Thoughts.........................

Marcon

SomeMadeUpName said:

Another question please to those who know:

In 1993 I contracted out of SERPS into a approved Personal Pension.  I was paying a fair bit of NI, in fact between 2000 and 2004 the max as I overpayed and HMRC NI would send me a refund cheque.  Over 11 years from '93 to '04 NI diverted to plan was about £14.5k.  From about 2002 after S2P was brought in I was getting letters from the provider saying they reckoned I should opt back in to S2P, but I preferred the money in my own defined pot and ignored them. In 2004 the provider wrote and said we still reckon you'll be better in state and so as trustees we will opt you back in.  I didn't object (even though I didn't really want to go back in) and they did, contributions to my pot stopped and went to S2P instead.  2005 to 2007 I still maxed out NI, 2007 to 2015 I paid less (no more refunds for sure) but I think probably paid some towards S2P, 2015 on I've been basic low NI.  Once New State Pension kicked in in 2016 my entitlement was still below the max New State Pension at that time so I was able to contribute more years and now will get the £179 (or applicable at the time).

Trouble is, if I'ld stayed contracted out in 2004 and onward my external pot would be bigger, my figure in 2016 would have been lower, but I would still have got to max New State Pension.

So have I any reasonable right to complain that they took a decision for me, that worked out to cost me money?  Or am I shot in the foot by any or all of the following:
I could have objected and didn't.
They took what was probably a reasonable decision at the time (albeit not the one I would have taken if they left it to me).
My ability to get up to max New State Pension is actually a gain for me, the fact it could have been a bigger gain is not the same as a loss.

Thoughts.........................

Have you got an up to date state pension forecast? If not: https://www.gov.uk/check-state-pension

You'll be under the 'transitional' arrangements, so it isn't quite as black and white (I think) you think - you could get more than the 'basic maximum new state pension'.

Either way, I doubt you would have a valid complaint; you could have taken action to continue to contract out if you wished and you chose not to do so - and the provider's decision would have been entirely reasonable at the time, given the prevailing facts.

dunstonh

From about 2002 after S2P was brought in I was getting letters from the provider saying they reckoned I should opt back in to S2P, but I preferred the money in my own defined pot and ignored them. In 2004 the provider wrote and said we still reckon you'll be better in state and so as trustees we will opt you back in.  I didn't object (even though I didn't really want to go back in) and they did, contributions to my pot stopped and went to S2P instead.  

That was a compliance thing on behalf of pensions set up by tied agents/FAs.  The rebates had been falling under the earlier Labour years (stealth tax) and it became unviable to contract out.  Ironically, Labour started to increase the rebates again towards the the of their term and with the 2006 changes, it made contracting out viable again.   

So have I any reasonable right to complain that they took a decision for me, that worked out to cost me money?  Or am I shot in the foot by any or all of the following:
I could have objected and didn't.

You can complain about whatever you like.  However, you have no case.   If you use an FA/restricted offering then you stuck with the terms of the restricted option.  If you wanted to remain contracted out you could have done so via an alternative product via an IFA.   They effectively said that and gave you that choice.  

This is one of the reasons you see on this site time and again that you should not use an FA but either use an IFA or DIY.   

They took what was probably a reasonable decision at the time (albeit not the one I would have taken if they left it to me).

It was reasonable at the time.  Indeed, possibly a few years too late.   However, they couldn't predict future changes and you were free to contract out either elsewhere or later years when it improved.    We advised people contracted people back in in the early 2000s but advised them to contract out again in the mid 2000s.  So, you could have done what you wanted if you really wanted it.

SomeMadeUpName

Thanks.

Thought as much, and tbh I'm not much of a 'complainer' anyway, it would have taken a bit of hypocrisy for me to instigate any complaint.  Not that there is anything wrong with righting past wrongs, just a bit too much band wagon riding imo.

Cheers for the input. 

SomeMadeUpName

Marcon said:

SomeMadeUpName said:

Another question please to those who know:

In 1993 I contracted out of SERPS into a approved Personal Pension.  I was paying a fair bit of NI, in fact between 2000 and 2004 the max as I overpayed and HMRC NI would send me a refund cheque.  Over 11 years from '93 to '04 NI diverted to plan was about £14.5k.  From about 2002 after S2P was brought in I was getting letters from the provider saying they reckoned I should opt back in to S2P, but I preferred the money in my own defined pot and ignored them. In 2004 the provider wrote and said we still reckon you'll be better in state and so as trustees we will opt you back in.  I didn't object (even though I didn't really want to go back in) and they did, contributions to my pot stopped and went to S2P instead.  2005 to 2007 I still maxed out NI, 2007 to 2015 I paid less (no more refunds for sure) but I think probably paid some towards S2P, 2015 on I've been basic low NI.  Once New State Pension kicked in in 2016 my entitlement was still below the max New State Pension at that time so I was able to contribute more years and now will get the £179 (or applicable at the time).

Trouble is, if I'ld stayed contracted out in 2004 and onward my external pot would be bigger, my figure in 2016 would have been lower, but I would still have got to max New State Pension.

So have I any reasonable right to complain that they took a decision for me, that worked out to cost me money?  Or am I shot in the foot by any or all of the following:
I could have objected and didn't.
They took what was probably a reasonable decision at the time (albeit not the one I would have taken if they left it to me).
My ability to get up to max New State Pension is actually a gain for me, the fact it could have been a bigger gain is not the same as a loss.

Thoughts.........................

Have you got an up to date state pension forecast? If not: https://www.gov.uk/check-state-pension

You'll be under the 'transitional' arrangements, so it isn't quite as black and white (I think) you think - you could get more than the 'basic maximum new state pension'.

SP forecast now says I have qualified for £179 and the most I can get is £179. So that's that.

SomeMadeUpName

BTW, that £14.5k I paid in between '93 and '04 now has a transfer value of £70k.  Given my family history of shorter lifespans (no one past 70) and the fact I'm already in cancer remission (ie SERPS/S2P enduring benefits only starting at 67 and ending on death) I'm happy enough with that decision I took to opt out in '93. 

zagfles

It was probably the right decision with the rules at the time. The way the new single tier state pension was implemented many years later was hugely advantageous to those who'd contracted out, as they got the opportunity to build up further state pension while those who hadn't contracted out hit the ceiling. No way they could have predicted that then, the state pension being flat rated had been on the cards but the details of the implementation and the way it affected those in/out couldn't possibly have been predicted. 

SomeMadeUpName

zagfles said:

It was probably the right decision with the rules at the time. The way the new single tier state pension was implemented many years later was hugely advantageous to those who'd contracted out, as they got the opportunity to build up further state pension while those who hadn't contracted out hit the ceiling. No way they could have predicted that then, the state pension being flat rated had been on the cards but the details of the implementation and the way it affected those in/out couldn't possibly have been predicted. 

Until I joined this forum, and started to learn and plan more for retirement, I had though that the COPE figure quoted on SP forecasts was in some way worked into the max poss entitlement.
This could have meant that the contacted in folk could build entitlement to a higher amount than the contracted out folk.
I guess that was one calc to far for the Gov.

zagfles

SomeMadeUpName said:

zagfles said:

It was probably the right decision with the rules at the time. The way the new single tier state pension was implemented many years later was hugely advantageous to those who'd contracted out, as they got the opportunity to build up further state pension while those who hadn't contracted out hit the ceiling. No way they could have predicted that then, the state pension being flat rated had been on the cards but the details of the implementation and the way it affected those in/out couldn't possibly have been predicted. 

Until I joined this forum, and started to learn and plan more for retirement, I had though that the COPE figure quoted on SP forecasts was in some way worked into the max poss entitlement.
This could have meant that the contacted in folk could build entitlement to a higher amount than the contracted out folk.
I guess that was one calc to far for the Gov.

It would have been logical and fair to do that, and it would have saved the govt a shedload. The way it was implemented was hugely discriminatory in favour of people who'd contracted out. Ironically, it's those who contracted out who whinged the most as they thought they were being hard done by "I've got 35 years why haven't I got the full pension" etc.

SomeMadeUpName

zagfles said:

SomeMadeUpName said:

zagfles said:

It was probably the right decision with the rules at the time. The way the new single tier state pension was implemented many years later was hugely advantageous to those who'd contracted out, as they got the opportunity to build up further state pension while those who hadn't contracted out hit the ceiling. No way they could have predicted that then, the state pension being flat rated had been on the cards but the details of the implementation and the way it affected those in/out couldn't possibly have been predicted. 

Until I joined this forum, and started to learn and plan more for retirement, I had though that the COPE figure quoted on SP forecasts was in some way worked into the max poss entitlement.
This could have meant that the contacted in folk could build entitlement to a higher amount than the contracted out folk.
I guess that was one calc to far for the Gov.

It would have been logical and fair to do that, and it would have saved the govt a shedload. The way it was implemented was hugely discriminatory in favour of people who'd contracted out. Ironically, it's those who contracted out who whinged the most as they thought they were being hard done by "I've got 35 years why haven't I got the full pension" etc.

Ha, like my whinging that whilst I did well by being contracted out for 11yrs I could have done even better if I'd stayed contracted out for longer!  

zagfles

SomeMadeUpName said:

zagfles said:

SomeMadeUpName said:

zagfles said:

It was probably the right decision with the rules at the time. The way the new single tier state pension was implemented many years later was hugely advantageous to those who'd contracted out, as they got the opportunity to build up further state pension while those who hadn't contracted out hit the ceiling. No way they could have predicted that then, the state pension being flat rated had been on the cards but the details of the implementation and the way it affected those in/out couldn't possibly have been predicted. 

Until I joined this forum, and started to learn and plan more for retirement, I had though that the COPE figure quoted on SP forecasts was in some way worked into the max poss entitlement.
This could have meant that the contacted in folk could build entitlement to a higher amount than the contracted out folk.
I guess that was one calc to far for the Gov.

It would have been logical and fair to do that, and it would have saved the govt a shedload. The way it was implemented was hugely discriminatory in favour of people who'd contracted out. Ironically, it's those who contracted out who whinged the most as they thought they were being hard done by "I've got 35 years why haven't I got the full pension" etc.

Ha, like my whinging that whilst I did well by being contracted out for 11yrs I could have done even better if I'd stayed contracted out for longer!  

At least that's a valid whinge Unlike those who think they're hard done by because they were contracted out rather than in.