Contracted out BUT never contracted back in

Suzkin

Hi,

Many years ago when I contributed to a company pension, I contracted OUT of SERPS.

Later on when I left - and then due to unfortunate circumstances found myself unemployed, and also working on a low wage for companies that didn't offer a company pension - I never thought to 'contract back IN'. I just left things as they were.

My question is: would I have needed to categorically 'contracted back IN', or am I in fact still 'contracted OUT'?

Can anyone advise me how this might affect or impact on my basic state pension, if at all?

Much appreciated.

dunstonh

You didnt contract out in the same way as contracting out with a personal pension. The minute you left that occupational pension scheme you were contracted back in again.

Contracting out is the same term to mean two different things with money purchase pensions and defined benefit pensions.

Suzkin

Thanks Donstonh. Does this mean that I could receive a second state pension, however small that might be? I ask this as my previous state pension forecasts (based on NI contributions) do not seem to indicate this.

EdInvestor

Suzkin wrote: »

Thanks Donstonh. Does this mean that I could receive a second state pension, however small that might be? I ask this as my previous state pension forecasts (based on NI contributions) do not seem to indicate this.

Yes, this may have been because you were on a low wage and thus not eleigible for S2p credits.Check again with https://www.thepensionservice.gov.uk when their forecasting systme is back late this year.

Suzkin

I've just looked at the Pensions link you've provided, and for State pensions, it says: "...increasing basic State Pension in line with earnings, rather than prices, which means it should rise more quickly each year than it does now. (This change will happen from 2012 at the earliest and by 2015 at the latest, and will also apply to people currently getting their state pension or who reach State Pension age before 6 April 2010) "

Does this mean our individual earnings (i.e. individual wages/salaries)? So people on higher salaries will receive more than those on a lower income? I'm on such a low wage, that I think I might lose out, and get less, should this be the case.

EdInvestor

Suzkin wrote: »

Does this mean our individual earnings (i.e. individual wages/salaries)? So people on higher salaries will receive more than those on a lower income? I'm on such a low wage, that I think I might lose out, and get less, should this be the case.

S2P(formerly the State Earnings Related Pension Scheme - SERPS) is indeed earnings- related so people who earn more, get more.

However, this is being changed to benefit the lower paid in future, so they get a bit more and the better paid get a bit less.If you earn below the lower earnings limit you don't qualify for S2P credits, so you need to check exactly what your situation is (obviously you will not get S2P for the years you were contracted out - you will get your private pension instead).

The S2P pension is additional money on top of the basic state pension, which is the same for everyone who has a full record of National Insurance contributions (30 years required for the full basic after 2010.)