Old SERPs Pension Plan Overall Outcome - Is it a thumbs up or a thumbs down?

Khandi

I need help with a dilemma… So, I’m retired now and drawing the government pension as well as a small defined benefit pension. I now need to plan what to do with another old pension that I joined in 1987; when I chose to opt out of SERPS. (Plan details below.)

However, before I do this I want to try and roughly gauge if this SERPs opt out pension could ultimately be considered to have had an overall reasonable or a poor outcome for the 38 years it has been invested? I want to try and reach an understanding so that I can carry on and liberate it in a sensible way, hopefully without too much regret over what was probably a bad idea when I was young and naive.

Obviously over time performance will have fluctuated, but, by my crude reckoning and small amount of research, I don’t believe it has ended well but I’m no expert and I’m hoping I can get a more reliable opinion than my own efforts?

As things are, I don’t know if my situation has any implications for complaint: for instance, if it has performed poorly then perhaps it would’ve been better to have stayed in SERPs? In which case, do I have a case for complaint, e.g. should I take this up with Phoenix Life, and/or maybe even pursue further with the FCA if necessary? I’ve seen other posts on here where people have considered doing this because of suspected mis-selling/poor performance, so it’s something I may need to consider doing.

In case it’s relevant I didn’t personally contribute any additional payments into this pension because I shortly moved into another job and joined that company’s scheme. I’ve checked with IR and I don’t have any missing NICs from that period of my working life.

Apologies if this is a ridiculous “ask” but I’d be glad of any thoughts to help further my understanding and move on. Thanks in advance.

Pension Plan details:

Pension Company - Phoenix Life (formerly SLoC)

Commenced - April 1987

Title - 50-75 Pension Plan (not detailed but would be viewed as a defined contribution, I believe?)

Description - Opted out of SERPS Personal Pension Plan with Protected Rights (PR no longer relevant, I believe.)

Initial investment - £6,700 taken from DSS (now DWP)

Current valuation - £57,000

Annual charges/fees - Universal managed fund 1% pa. £2.30 per month plan fee. TER charge of 1% - not broken out or made clear of how much this is. Need more information.

Benefits - Looks like only a death benefit that pays out to my partner. Nothing else clear on paperwork so I need to check if there are any others.

Marcon

Khandi said:

I need help with a dilemma… So, I’m retired now and drawing the government pension as well as a small defined benefit pension. I now need to plan what to do with another old pension that I joined in 1987; when I chose to opt out of SERPS. (Plan details below.)

However, before I do this I want to try and roughly gauge if this SERPs opt out pension could ultimately be considered to have had an overall reasonable or a poor outcome for the 38 years it has been invested? I want to try and reach an understanding so that I can carry on and liberate it in a sensible way, hopefully without too much regret over what was probably a bad idea when I was young and naive.

Obviously over time performance will have fluctuated, but, by my crude reckoning and small amount of research, I don’t believe it has ended well but I’m no expert and I’m hoping I can get a more reliable opinion than my own efforts?

As things are, I don’t know if my situation has any implications for complaint: for instance, if it has performed poorly then perhaps it would’ve been better to have stayed in SERPs? In which case, do I have a case for complaint, e.g. should I take this up with Phoenix Life, and/or maybe even pursue further with the FCA if necessary? I’ve seen other posts on here where people have considered doing this because of suspected mis-selling/poor performance, so it’s something I may need to consider doing.

In case it’s relevant I didn’t personally contribute any additional payments into this pension because I shortly moved into another job and joined that company’s scheme. I’ve checked with IR and I don’t have any missing NICs from that period of my working life.

Apologies if this is a ridiculous “ask” but I’d be glad of any thoughts to help further my understanding and move on. Thanks in advance.

Pension Plan details:

Pension Company - Phoenix Life (formerly SLoC)

Commenced - April 1987

Title - 50-75 Pension Plan (not detailed but would be viewed as a defined contribution, I believe?)

Description - Opted out of SERPS Personal Pension Plan with Protected Rights (PR no longer relevant, I believe.)

Initial investment - £6,700 taken from DSS (now DWP)

Current valuation - £57,000

Annual charges/fees - Universal managed fund 1% pa. £2.30 per month plan fee. TER charge of 1% - not broken out or made clear of how much this is. Need more information.

Benefits - Looks like only a death benefit that pays out to my partner. Nothing else clear on paperwork so I need to check if there are any others.

What's the dilemma? You have a pension and you can access it! Whether its performance was good or bad doesn't alter that fact.

It would be useful to know how old you are - ie when did you reach State Pension Age?

As for a complaint - forget it. It doesn't sound as if you've taken any active decisions about fund choices or checked that fees have remained competitive for 38 years, which is entirely your responsibility. You are time barred, even if you can demonstrate you received poor advice - but happily it's highly unlikely that was the case. If you were 'young and naive' when you contracted out of SERPS by means of an 'appropriate' personal pension (which is apparently what you did - and it can't have been in 1987, since doing so only became possible in1988), that was very much 'the order of the day' back in the late 1980s/1990s, and many 'younger' people (under 45 if male, under 40 if female - over that age and contracting back in to SERPS rather than using a personal pension purely to contract out was likely to be advisable) fared better than if they'd remained in SERPS. 

Your question is by no means a 'ridiculous ask', but it really isn't worth getting too steamed up about. Check what options you have for accessing the pension and if they don't meet your needs (eg phased drawdown or similar), transfer it to a more modern contract.

dunstonh

Obviously over time performance will have fluctuated, but, by my crude reckoning and small amount of research, I don’t believe it has ended well but I’m no expert and I’m hoping I can get a more reliable opinion than my own efforts?

Most people who contracted out of SERPS are financially better off by doing so. Especially those that have built entitlement under the new state pension to replace contracted out years on the old state pension.

In 1996, the SIB did a review of contracting out and found that everyone that had contracted out up to that point was better off.

As things are, I don’t know if my situation has any implications for complaint: for instance, if it has performed poorly then perhaps it would’ve been better to have stayed in SERPs? In which case, do I have a case for complaint, e.g. should I take this up with Phoenix Life, and/or maybe even pursue further with the FCA if necessary?

a) what is your definition of poor performance?   Take the last 7 years.   In that period, the stockmarket has doubled but bonds are more or less in the same position they were 7 years ago.   Some types of bonds have seen massive losses in that period due to a 1 in 100 year event.       So, if you were heavy in the stock market in the last 7 years, in particular US equities, then you have done very well. If you were heavy in bonds, then you have done quite poorly.  However,  that is the benefit of hindsight.   

b) the FCA do not allow complaints on the basis of performance.  
c) The FCA do not handle consumer complaints
d) almost certainly, the product you have is out-of-date by modern standards both in charges and investment options.  However, that is not the fault of the provider but of you.   You have had this pension 38 years and have done nothing with it until now.    How many other things do you have from 38 years ago that you haven't changed or updated?
e) Any complaints made will be based on the rules of the time.   1987 is pre-regulation.    
f) any complaints considered will use the pivotal age rules of that time.  The pivotal rule age changed over the years due to the size of the rebates changing.   But in 1987, with the pre-Royal Ascent bonuses for contracting out, it would have been around age 45-50. i.e. if you were under that age at the time of contracting out, then it was suitable to do so.   You also had to be earning above the lower earnings limit of that time.  That was £1976 in 1987/88.   So, if you were earning over that, you were suitable for contracting out.

here is a typical FOS outcome:  https://www.financial-ombudsman.org.uk/decision/DRN7640132.pdf

I’ve seen other posts on here where people have considered doing this because of suspected mis-selling/poor performance, so it’s something I may need to consider doing.

I haven't seen such a post for a very long time.  For a while, some ambulance chasers tried to drum up fake complaints on the basis of what you suggested, but the FOS rejected the vast majority, and the claims companies gave up.

Initial investment - £6,700 taken from DSS (now DWP)
Current valuation - £57,000

So, you now have a pot of £57,000 that is yours to access as you wish.

If you had contracted in, you would not have that £57k and it is likely your weekly state pension would have been around £20-£30 a week more (hard to say without additional figures and dates, but that is in the ballpark of what you see with retirees today with contracted in records).

£57,000 divided by £30 is 1900 weeks, which equates to 36 years.    The £30 would get indexation but the £57k would get returns.  

Which do you prefer?

Khandi

Thank you for your harsh, but arguably fair, comments. For the record, I officially retired in 2020. I'm female, 70, and in poor health, which is why I'm getting steamed up about it!  I have taken some advice from an IFA - much good that was, also Pension Wise some years' ago.

I am indeed pleased it's a chunk of money I can access, and I pretty much know what I'm going to do with it but I have more research to do. I have left it there deliberately because it's a stash of money that I might need for additional care in the coming years. £50k will be consumed rapidly if that happens.

I don't want to particularly make a complaint, I merely wanted to get a feeling of whether or not it's been a total failure; either performance wise, and/or due to my own neglect (for which I do accept responsibility). This might have a bearing on what risk profile I might consider for its future investment, if I go down that route.

Whatever, I choose I have a responsibility to my partner, who will inherit some of it and I need to do my best for him in dealing with my estate, part which will be this pension.

Additionally, I have a small shortfall in my government pension, which was caused by having to medically retire six years' early due to ill-health and missing out on some NICs. Again my fault for not knowing the self-employed CAN claim benefits. I am currently pursuing my case with the DWP as I was eventually put on PIP benefits and possibly could have had some NIC credits. They are currently ignoring the two letters I have written. I expect they are very busy.

The moral of the story is if you stick your head in the sand, as I did, you eventually have to come up and take stock, learn your lessons, and see what you can do to remedy the situation - some reflection is necessary. Now is that time of reckoning and I have work to do sorting out this mess as well as being a full-time carer.

Khandi

Thank you dunstonh, your thoughts are what I needed to hear, and that's exactly what I came here for.