Contracted Out or Contracted In ?

isasmurf

The simplest thing would be to contact NU and ask for the relevant form to contract-back in. Although the important thing to note is that if you contract back in now, it will not take effect until the beginning of the next tax year, i.e. 6th April 2005.

As for whether your boyfriend should have a Stakeholder Pension I'm no financial advisor so I wouldn't know. They were supposed to have been designed for people earning between £10k and £20k but some (or one person at least) on here seems to think that you Personal Pensions can get a better return.

Paulina_Fortune

Thanks for the reply. It's a good point that he can't really do anything to contract back in until April 2005. In the meantime, I'll do some research to make a bit more of an informed decision.

My boyfriend has started a new job and when he gets through the probationary period, I think he will get a chance to do a pension through them where the company contributes something. I think that will be the time to see his IFA and ask some tough questions about his options.

Thanks again.

dunstonh

This may sound like a bit of a daft question - but how do you go about contracting back in?

My boyfriend contacted out in the 80's and no longer works for the same company. He gets statements from the NU every so often, but no guidance about what to do with it.

He also has a private pension with Clerical Medical and it all seems to be very confusing. We have a horrible nagging doubt that in spite of paying for a Private Pension and contracting out, he will be left a pauper when it comes to retiring. He's currently 35 years old. We don't even know if he should really have a stakeholder pension, because he earns less than £20k. The IFA we have just says to have faith and doesn't think he would be better off with a stakeholder - well he would say that bearing in mind his commission........

Thanks.

I think you would find the IFA would earn more commission by transferring your pension to another provider rather than leave it where it is.

You can ask the IFA to get you a current value and projection on the existing plan based on current contributions and assuming no more contracting out. You can then see for yourself if the IFA is right or not.

A personal pension is just a stakeholder pension with a different charging process. Low income has nothing to do with whether you should be in a personal pension or stakeholder pension. Do not equate income as to whether you should be in a stakeholder or a personal pension.

Many providers (and i think clerical medical included), equalised their charging structure between personal pensions and stakeholders making the two no different. Of course you can get this verified to make sure that the CM & NU plans are charged that way.

Paulina_Fortune

Thanks for this. I'll do some more investigating. We have no idea at present what the charges are for either. I do know that the personal pension fund is worth less than he's paid in over the last 7 years.

Time to get a "teach yourself pensions" book!
:-/
Thanks again.

dunstonh

I do know that the personal pension fund is worth less than he's paid in over the last 7 years.

As would a stakeholder had he chosen the same funds.

I'm guessing he chose one fund rather than a selection of funds in various investment areas. That perhaps should be another thing to look at.

Milarky

The simplest thing would be to contact NU and ask for the relevant form to contract-back in.  Although the important thing to note is that if you contract back in now, it will not take effect until the beginning of the next tax year, i.e. 6th April 2005.  

I think this should read:

"You may contract back in at any time but it is now too too late to contract back in for the last tax year 2003-04" [It can't be too late to contract back in for this tax year because we are only half way through it!]

A rebate will therefore now be paid [if it hasn't already been] to his insurer in respect of YBF's earnings in 2003-04. If he signs the form 'cancelling' his election to CO 'today', say, he should get State Second Pension [S2P] benefits based on this year's income - and likewise going forward.