stay with private or rejoin state pension

honeybee46

Hello

I took out a private pension 16 years ago when I was 30 and I only pay £73.00 per month. I have had a letter from the pension company to say that they are going to contract me back into S2P. They say that I am likely to benefit financially.

I don't really understand the implications of this, I think that if I stay opted out I can draw on my pension when I reach 60 but if I contract back in I will have to wait until the age of 65 before I can do this.

Is this correct? You may not be able to answer without more details?

Many thanks

Carol

dunstonh

There are three reasons why a company would tell you to contract in:

1 - They sold the policy via one of their teid agents and want to reduce their liability. This may or may not be for your benefit but is for theirs.
2 - You are invested in a fund or funds with limited growth potential
3 - You are aged 45 or over and have passed the pivotal age (40 for women, 45 for men) where its best to contract in.

The latter looks most likely when you add 16 years ago to age 30.

I think that if I stay opted out I can draw on my pension when I reach 60

Yes. Indeed, you can get it as early as 55.

but if I contract back in I will have to wait until the age of 65 before I can do this.

You can get it state retirement age which will be 66 in your case. Not 65.

The fund accrued already from contracting out will still be available from 55 onwards. It will only be the contracted in pension from now on that will be
available at your state pension age.

Your contribution of £73pm starting at age 30 isnt going to be enough to retire at age 60. It will not really be enough for 66 either unless you are planning for a basic retirement. You are going to need to have other means in retirement if you are looking at 60 or you are going to have to increase your provision.