SERPS - contracting in or out?

Spud_2 · 27 January 2006 at 1:46PM

I'm 34 and have my own stakeholder pension (Standard Life) paying £50 per month into it.

I've never got my head around SERPS and contracting in or out - I've no idea what I am currently doing. How do I find this out and what would be best in my circumstances?

Apologies - have now started reading the threads closer and spotted the sticky - if anyone has anything specific to add to my circumstances then great, if not I shall read the whole thing and gen up!

Debt_Free_Chick · 27 January 2006 at 1:59PM

Essentially it's a gamble. You agree to give up some of your state pension. In exchange you get some of your NIC paid to your pension plan. That pension plan then produces a pension ... which may be more or less than the state pension you agreed to give up.

If your state pension is an important part of your retirement income, then you are less likely to be able to gamble on it. If it's just a small portion, then you might want to consider it.

When weighing up this gamble, you have to consider that future Governments might change the rules and reduce your current state pension expectation - it's unusual, but possible (as they normally only reduce future expectations).

If you are really savvy with your retirement income planning, then (IMHO) the state pension ain't worth messing with - it will not turn you into a millionaire pensioner, overnight

SERPS - contracting in or out?

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