Opted out of Serps in 1990

sizojolu · 27 September 2013 at 11:10AM

I really could do with some advice. I'm ashamed to say that pensions are the one financial aspect that I become complete confused and blinkered by. When I was 18 my parents' financial adviser from the Prudential advised me that I should set up a pension and that I should also opt out of SERPS as this would be beneficial to me in the future. That is all I can recall. I set the pension up and was opted out of SERPS. I paid into the pension for some time (a mininal amount I was on a tiny office junior wage) and then stopped making payments. Pru say I only have the SERPS pension. I am running a trace on the other. I have moved around a little and recently informed Prudential of my new address which has caused me to look at this. Pru have said in 2012 the SERPS scheme ended and therefore the pension will no longer have contributions made to it. They state that in 2004 my government contributions ceased anyway and this leads me to beleive that a subsequent IFA opted me back in!!! What I am trying to find out is what this all means for me. My husband and I both have frozen pensions (various) which we have had combined into one pension each (except for the Pru for me). We are looking to start planning again for the future; we are looking at SIP (although only just trying to understand what this means and whether it would be worth us buying a property to rent out as opposed to starting another pension and using the combined pension pots as a deposit). Over the years we have had numerous IFA's and every single pension we have started (about 4 each), within a few years we have been told by them or somebody else that that pension is not performing anymore and we should freeze and go with another one. We are so confused. Essentially, my husband has approx 25,000.00 and I have £8,000.00 and the Pru of £14,000.00. I know this isn't a huge amount and we want to try and make it work for us going forwards. I am in the process of obtaining a state pension statement from HMRC as I want to know how this will affect me when I retire as being 18 and very niave I signed up to something on the advice of somebody employed to give that advice and not really appreciate any of the consequences of doing this. We are at a loss - confused and ashamed to say overwhelmed by pensions - in all other financial aspects of our lives I have a great understanding just not with this. Thank you.

McKneff · 27 September 2013 at 11:22AM

Im sure one or two of the pension experts will be along to help soon, but I keep seeing the words 'freeze and pension'

Pensions are never 'frozen' you can stop paying into them, but they are still there, working away in the background and growing all the time.

sizojolu · 27 September 2013 at 11:27AM

Yes you are quite correct, I do understand that - I suppose wrong term used.

dunstonh · 27 September 2013 at 11:59AM

When I was 18 my parents' financial adviser from the Prudential advised me that I should set up a pension and that I should also opt out of SERPS as this would be beneficial to me in the future.

18 was a good age to contract out. So, nothing unexpected there. In the early 90s, the optimal age for contracting back in with many plans was in the low 50s. So, you are way under that.

I paid into the pension for some time (a mininal amount I was on a tiny office junior wage) and then stopped making payments.

WHo soon did you stop? Back then, pensions were expensive. You typically didnt get a value for the first 2-5 years.

Pru say I only have the SERPS pension. I am running a trace on the other.

Pru supply very good policy records whenever we request data. The first page gives payment history including dates and amounts paid and if made paid up or lapsed.

They state that in 2004 my government contributions ceased anyway and this leads me to beleive that a subsequent IFA opted me back in!!

Possibly if you sought advice via an IFA back then. Or Pru themselves may have auto contracted you back in if you used an FA. Or it may be that you joined an occupational scheme that took over the contracting out.

Over the years we have had numerous IFA's and every single pension we have started (about 4 each), within a few years we have been told by them or somebody else that that pension is not performing anymore and we should freeze and go with another one.

Quite possibly the case. Charges have been falling almost year on year for the last 15 years. So moving to newer cheaper ones is not uncommon. However, I am surprised these IFAs didnt transfer the existing schemes as IFAs would normally do that. FAs/sales reps on the other hand rarely had the authorisation to do transfers and would leave the old one in place. Were these FAs, IFAs or sales reps (of the insurer)?

sizojolu · 1 October 2013 at 4:20PM

I believe they were FA working for a broker - not sure whether they were truly independent or had connections to specific insurers. I know that with regard to the first, the pensions were all Pearl pensions, then NPI and then Scottish Mutual which were all "Pearl essentially". Laterally the advised we merge them all into one pot which we now have with Aegon. I was told the Pru was performing well so to leave that out of the merging of the various pensions.

We really do need to seek advice on a way forward for the future but not sure what to do. I suppose what we are looking for is truly independent advice going forwards with no ties to any organisation, just specifically looking at our needs.

dunstonh · 1 October 2013 at 4:34PM

We really do need to seek advice on a way forward for the future but not sure what to do. I suppose what we are looking for is truly independent advice going forwards with no ties to any organisation, just specifically looking at our needs.

Any local IFA should be fine then. Main database is at https://www.unbiased.co.uk The entries show the status of the adviser. Either independent or Restricted. Avoid restricted.

Opted out of Serps in 1990

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