I know nothing about pensions (How embarred am i?)

savingforarainyday

I have a few questions about state pensions. I am so embarrased that i am 46 years old and know so little about pensions:o

I opted out of serps in the 1980's apparently and then transferred this into the environment agency pension scheme when i worked there. I left end of 2002 and after nearly a year i realised i could claim carer's allowance so i have had contributions credited since

My DH was self employed up until 1991 with no private pension, he opted out of serps in mid 1990's into a scheme set up through friends provident via his employer. this ceased about 3 years ago and serps have continued to be credited to this fund.

I dont know if my assumptions are correct but, i thought that the state pension came in to parts, basic state pension, which is credited while you are working and provided you have worked enough years you will receive and serps which provide a top up unless you have opted out then these are paid into a private pension funds this part.

Friends provident with the last statement recommended that he opts back in to serps. do we know why this is and if DH wants to retire early would this be wise.

These questions are for starters and i will be able to show the true level of my lack of understanding of pensions later.

any explanations will be gratefully received.

EdInvestor

savingforarainyday wrote: »

I opted out of serps in the 1980's apparently and then transferred this into the environment agency pension scheme when i worked there. I left end of 2002 and after nearly a year i realised i could claim carer's allowance so i have had contributions credited since.

The conts credited under the carers allowance will primarily be for the basic state pension.IIRC there is a small amount for the second state pension (SERPS/S2P).
Your basic state pension will have been paid for via your NICS while working and your S2P will arrive as part of your works pensions from the environment agency.

My DH was self employed up until 1991 with no private pension

Self employed people are not eligible for the state 2nd pension: he will have paid voluntary class 2 contributions to the basic state pension.

he opted out of serps in mid 1990's into a scheme set up through friends provident via his employer. this ceased about 3 years ago and serps have continued to be credited to this fund.

This would only be the case if he is still employed or on benefits.

I thought that the state pension came in to parts, basic state pension, which is credited while you are working and provided you have worked enough years you will receive and serps which provide a top up unless you have opted out then these are paid into a private pension funds this part.

That's correct.

Friends provident with the last statement recommended that he opts back in to serps. do we know why this is and if DH wants to retire early would this be wise.

It's because the rebate money has been reduced such that it is hard to better the S2P through investment in a PP.It's probably sensible for him to opt back in.

dunstonh

I opted out of serps in the 1980's apparently and then transferred this into the environment agency pension scheme when i worked there.

Most final salary occupational schemes will not accept protected rights transfers (thats contracted out money).

Do you mean you were contracted out via a works pension or contracted out via a personal pension?

Friends provident with the last statement recommended that he opts back in to serps. do we know why this is and if DH wants to retire early would this be wise.

Contracted out pensions sold by tied agents have had the providers suggesting people contract back in to protect themselves from complaints rather than what is best for you. Other reasons why they would suggest contracting in is that you are aged 45 or over (the age that its worth contracting in) or you are invested in low growth funds or funds with limited growth potential. Rebates are actually going up next year until contracting out is abolished some time between 2012-2015.

savingforarainyday

Thanks for your input. I think my next move is to ask for a pension forecast from dwp.

DH wants to retire sometime around the age of 55-57 2015/17, would this make either route preferable?

We have a couple of options to save for retirement.

Do we pay off mortgage over the next 5-6 years which is do able and then pour our spare cash into savings, ISA's etc.

Or Pay less off the mortgage and put some money into a private pension.

This would give us

The value of our home, to sell and/or downsize, DH would like to retire to Turkey.

and either a pot of savings, or less savings and a pension fund.

I would quite happily pay someone for advice locally, but where can i be sure that it is someone who will not want to sell me something, just be paid for their advice.

Josephina_2

Hi

Great minds think alike, I've been trying to get an answer to this as well. The problem is if you ask advice of money making organisations its easy not to trust what they are telling you because you believe they just want to make money from you. I have a private pension and my contracted out serps has been invested in that but my husband dosnt have a private pension, he opted out in the 80's and this money is just sitting there with a pension company. We have no idea what he should do with this money and whether or not he should opt back in to serps. He is 42 and is very reluctant to start a pension, he thinks he would be better saving money in an isa or something. If anyone could give me advice too I would be grateful.

dunstonh

I would quite happily pay someone for advice locally, but where can i be sure that it is someone who will not want to sell me something, just be paid for their advice.

Go to an IFA and you wont have that problem.

the problem is if you ask advice of money making organisations its easy not to trust what they are telling you because you believe they just want to make money from you.

As above, go to an IFA on fee basis and you wont have that problem. Going to a provider's tied agent is never the best way to get advice as their role is sales.

opted out in the 80's and this money is just sitting there with a pension company.

Probably a good decision. However, his pension may need updating to a more modern one. Like any product, if its 20 years old it may need updating.

We have no idea what he should do with this money and whether or not he should opt back in to serps. He is 42

Depends on what he is after from his pension but he is close to the pivotal age when you should contract in for financial reasons (45).

he thinks he would be better saving money in an isa or something.

Cash ISAs are not suitable for long term planning. They dont make enough money to give you real growth over the long term. Stocks and shares ISAs are a possible alterntive and a combination of those and pensions can be a good thing. Cash ISAs are better suited in the run in from about 5-6 years before retirement or if you are able to utilise both cash and stocks and shares ISA.

If anyone could give me advice too I would be grateful.

It is against board rules to give advice on regulated areas and it would also breach FSA rules. Even those of us authorised cannot do it as we cannot meet the compliance requirements. So, anything posted is for discussion only. There is no FOS protection should you act on anything you read without getting advice first.

Josephina_2

Hi Dunstonh

I take your points, thanks for taking the time to reply.