State pension questions

EdInvestor

cottager wrote: »

I also thought deferring meant no further DSS contributions would or could go into it after 1994, hence my question about what would have happened about SERPS 1994-99, and whether there was any loss.

Very possibly Nationwide contracted you back in at this time when you left. See link below to check.

My new employers had no pension scheme, so I began the second plan in 1999 with Standard Life (which I'm still paying into), and in 2000 contracted back in.

So when you contracted back in, where had the rebates been going to? The SL scheme?

Sorry, this follows from not fully understanding deferment -- would the DSS contributions nevertheless still have been paid into it (till starting the S/Life plan), even though Nationwide's matching was not?

Ask here: https://www.thepensionservice.gov.uk They should be able to track the rebates down.

The deferred scheme is administered by Nationwide Pension Fund. It was originally a Standard Life policy and annual statements came from them for a while, but later on from Nationwide Pension Fund who presumably took it in-house.

The details you post suggest it is indeed a deferred final salary pension, which can't be reactivated.This does appear to be rather a good pension BTW, don't mess about with it. .

cottager

EdInvestor wrote: »

So when you contracted back in, where had the rebates been going to? The SL scheme?

As far as I can tell, yes.

In the earliest statements there's an element listed under 'payments in' of:
DSS contributions (contracted-out of SERPS)
which disappeared later after contracting back in.

This does appear to be rather a good pension BTW, don't mess about with it.

Well, having 'forgotten about it' till digging out the paperwork in the last couple of days, I thought so. A pleasant surprise, and very welcome.

Thank you for the other information also.

cottager

Sorry EdInvestor, should have included in my last...

If NI contributions found their way into the SL scheme from when it was taken out in 1999 until 2000, this presumably indicates Nationwide had not contracted me back in when their pension was deferred?

EdInvestor

cottager wrote: »

Sorry EdInvestor, should have included in my last...

If NI contributions found their way into the SL scheme from when it was taken out in 1999 until 2000, this presumably indicates Nationwide had not contracted me back in when their pension was deferred?

You need to check with the Pensions Service to see if they have you contracted out or in for those years and if the former, where they sent the rebates.It's possible you signed a new contracted-out document when you opened the SL pension but have forgotten about it. Were you working and contracted in between 1978(when SERPS started) and 1989, when you started at NW?

cottager

EdInvestor wrote: »

You need to check with the Pensions Service to see if they have you contracted out or in for those years and if the former, where they sent the rebates.

Thanks EdInvestor, and have done. Several phone calls and being passed from the Pensions Service to Retirement Pension Forecasting/Future Pensions to NISPI (all most helpful I have to say, and contributing to the picture), then speaking to Standard Life. I think I follow what the situation with SERPS was, though may not explain it very well. Later I also unearthed more paperwork which has helped.

The key seems to be the Standard Life plan.

I was admitted to the NEARBS (the Nationwide scheme) on 1 Jul 1988. The certificate is from SL, and the member's booklet refers to NEARBS as 'arranged in conjunction with' SL.

Apologies are due, as I badly misled you with contributions: 5.25% of my contributable salary is mentioned -- grey matter clearly not what it was, as I really hadn't remembered contributing anything till finding this. It probably accounts for what we thought above were the good figures? Possibly also your view it shouldn't be messed with.

When my employing company was sold on, terms were offered to T/F to a new (but different and apparently not comparable) scheme from Nov 1994, but as explained I failed either to take this up or to transfer elsewhere, and the NEARBS plan was deferred.

Also among further paperwork: Letter 1994 confirms admin of SL pension would be dealt with by Nationwide Pensions. In 1997: 'All liabilities for your pension benefits will be transferred to Nationwide Pension Fund (NPF).' A change then was that the pension would be paid from age 60 instead of 63 (spouse benefit % also increased), though the contracted-out part of it remains payable from State Pension Age.

In 1999 I started what I thought -- till today -- was a new pension of my own, though coincidentally with Standard Life. But it became clear on speaking with Pension Forecasting this was not the case: as far as they're concerned there was never any change, my record showing DSS rebates continuously paid to the same destination from 1989-2000, i.e. no 'gap' from 94-99. Pension Forecasting could see this much, but not what the destination actually was or the full references. For that I was referred to NISPI, who quoted these details very quickly. And it turned out to be Standard Life :rolleyes: so finally clues about what could have happened in the 90s.

On ringing SL they confirmed nothing 'stopped'. My 1999 application was not, as I'd thought, to start a new plan but to start my own payments into the existing one. The lightbulb moment! After 1994 they still received rebates from DSS till 2000 and contracting-out, but from 1999 (and to date) my own payments as well. According to them, the plan has been continuous since 1987. This I don't understand: it's the year we were taken over but none of us were invited to join NEARBS till the following year -- but it seems a minor detail. While on to them I asked for a plan value which was quickly emailed.

I don't follow the intricacies of how the NEARBS part separated off while the SL part continued (or v/v perhaps), but it doesn't seem vital to know. I'm reassured all rebates were received and not falling through any cracks.

If all this makes some sense to you, I believe it's mystery solved?

A big thanks for pointing me in the right direction and encouraging me to dig further, as it was well worth it. I'm just sorry some of the earlier questions were unnecessary if I'd found other documentation before starting this... though I still don't think I'd have cottoned on to what was going on 94-99, nor that everything came down to the same SL plan. Genuinely didn't appreciate I hadn't taken out a new one in '99: it was done through an IFA so quite likely explained and I've since forgotten; but no reference to it on the application, nor in the illustration before signing up, both of which I'd checked before bringing it up here.

EdInvestor

Gosh, pretty complex even by the murky standards of the pension world. :rolleyes:

What funds is your money in the Std Life pension invested in?

If it goes back so far, this area almost certainly needs attention.

cottager

EdInvestor wrote: »

Gosh, pretty complex even by the murky standards of the pension world.

The first sentence of the illustration/acceptance letter in 1999 begins:
You have made an application to increase the premiums on the above policy ...
In a later para:
This illustration is for an increment to an existing Standard Life Personal Pension contract with contributions payable monthly.
So 'increment' must be the term (or their term) for morphing from one thing to another at that time.

What funds is your money in the Std Life pension invested in?
If it goes back so far, this area almost certainly needs attention.

In the 1999 application the investment choices agreed (having told the IFA I didn't want to take high risk) were:
10% With Profits, 40% UK Equity, 30% European Equity and 20% Japan Equity.

In the document just received from S/Life (which looks slightly different from the usual annual statement -- doesn't include exactly the same info):

Current fund value/total amounts in each fund
Pension European One Fund: £5,931.82
Pension With Profits Fund: £1,447.47
Pension UK Equity One Fund: £7,645.81
Pension Japanese One Fund: £2,184.45
Pension Millennium With Profits Fund: £1,105.81
TOTAL £18,315.36
(in July 2007 the total was £18,870.29)

Transfer value
From ordinary benefits: £15,653.15
From payments to replace second state pension: £2,697.34
Transfer value from payments made before 6 Apr 1997: £810.51
Transfer value from payments made after 5 Apr 1997: £1,886.83
TOTAL £18,350.49
(I don't see a transfer value in the 2007 annual statement)

You asked for a good deal more info earlier in the thread, e.g. annual charges, switching, guarantees etc, but I'm getting rather lost there. I could come up with it for you I'm sure, but (because I don't know which salient bits to pick out) only by reproducing large-ish chunks of text from a combination of the original illustration, the policy document and annual statement. I don't mind doing that at all, but it's an imposition for you and could be lengthy reading. We do have an IFA after all, who in fact quite recently suggested a meeting to review this and other things with us both.

It seems more sensible and responsible that all I should reasonably hope to gain here is a better understanding of the questions I should be asking him. Possibly also where you feel the funds may do more than they are, which would be respected as an opinion only. I mean, did you throw a fit on seeing UK or Japan or Equity etc, in the list above? Or all of them? Do you have an opinion on where they should be instead and why, in light of present trends? While understanding I must take my own view, this would be extremely useful to take on board, and appreciated.

Having looked at the SL pension projections just received, at the low end (£2030 pa) it's less than from NEARBS as projected back in 2000 (above), yet I'm sure I must have paid more into SL over the past 9 years than I did over 6 yrs earlier on into NEARBS. At the high end SL's projection is £4250 pa. Is there a case for asking the IFA about transferring out from SL altogether to something else? Or at this stage in the proceedings (i.e. my life) am I pretty much stuck with it, bar possibly switching funds? The SL plan runs till age 65 in 2016....

.... so it's just dawned on me I will need to pay into the SL plan for 4 years out of my State Pension! -- or savings, or whatever. A sobering thought _pale_

EdInvestor

cottager wrote: »

In the 1999 application the investment choices agreed (having told the IFA I didn't want to take high risk) were:
10% With Profits, 40% UK Equity, 30% European Equity and 20% Japan Equity.

Not a bad choice given what was avaiable at the time, though you would have done a lot better if you had had 10% of the Japan money in Emerging Markets.

In the document just received from S/Life (which looks slightly different from the usual annual statement -- doesn't include exactly the same info):

Pension With Profits Fund: £1,447.47

This fund has a 4% guaranteed return, you might look at it as a cash/gilt component of the portfolio

Pension Millennium With Profits Fund: £1,105.81

This WP fund has no guarantee.I would switch this money, and also the Japan money (since 1990 the Japanese stockmarket has had an unrivalled capacity to disappoint!)

I suggest you look with your IFA at a new investment plan for this pension, featuring some quality external funds from outside SL (not previously available). Switching should be free.The IFA can tell you the charges.

Having looked at the SL pension projections just received, at the low end (£2030 pa) it's less than from NEARBS as projected back in 2000 (above), yet I'm sure I must have paid more into SL over the past 9 years than I did over 6 yrs earlier on into NEARBS.

The NEARBS is akin to a company final salary pension and they are almost always better.

Is there a case for asking the IFA about transferring out from SL altogether to something else? Or at this stage in the proceedings (i.e. my life) am I pretty much stuck with it, bar possibly switching funds?

You can move it any time. But SL has a reasonable choice of external funds and low charges, so unless you want to take a lot more investment interest and go to a SIPP, there's not a lot of point in a transfer, fund switching is the key IMHO.

The SL plan runs till age 65 in 2016........ so it's just dawned on me I will need to pay into the SL plan for 4 years out of my State Pension! -- or savings, or whatever. A sobering thought _pale_

Not at all, you can stop paying in any time and indeed you can convert this plan into a pension income, taking 25% tax free cash right now, if you like.The age for taking personal pensions is 50 (55 from 2010).

There is a new rule where you can take the TFC and leave the rest in "income drawdown" to grow until you need it, no longer any need to take an immediate annuity income if that suits better (eg for tax reasons).If this appealed you would need to move to a SIPP (should be possible after October, at present, protected rights money can't go into SIPPs).

Arguably there's less risk in moving to a SIPP earlier, as it removes the "cliff edge" nature of retirement, where you can get caught having to buy an annuity in a falling market, like now.

cottager

Most helpful, thanks for your trouble. But my ignorance is really beginning to show now

e.g.

EdInvestor wrote: »

Not at all, you can stop paying in any time and indeed you can convert this plan into a pension income, taking 25% tax free cash right now, if you like. The age for taking personal pensions is 50 (55 from 2010).

Yes I realise those options exist, but aren't the pension projections per annum based on the assumption I will continue paying into the scheme at the current level till age 65?? So if I stopped any earlier, the whole basis on which they're provided collapses? -- the pot is much smaller than anticipated etc etc.
Or is this wrong, and the figures are actually only based on what has been paid in so far?

EdInvestor

The projections are based on you continuing to make the same contributions, plus the fund experiencing some growth. The regulator sets the growth figures, IIRC they are 5%,7% and 9% for pensions.These projections just give you an idea, they are not guaranteed in any way. They may be much more or much less, depending on the performance of the markets and how annuity rates change over time.

Also SL usually uses the most expensive annuity options for its projections of income, it quotes for an index linked annuity, joint life.Most people choose options that pay out much more at the start.

If you want to see how much income you would get if you took the pension now, you can check here:

https://www.fsa.gov.uk/tables

BTW you can draw out 120% of the annuity rate if you use income drawdown.