SERPS Opting out etc etc

[Viney]

Now when i was younger i remember optiong out of SERPS and opening a Abbey National Retirement Investment Account on the advice of my then girlfriends mum who work for the Shabby Abbey.

Something popped up in the advertising on Facbook that sort of raised my interest in that i may have been mis sold, or that its falling short of what should be in there.

Has anyone dealt with this kind of thing recently? I am going to try and sort an apointment with Santander when im off at the end of the month if nto going to try this service.

[TamSV]

I personally wouldn't bother. It's coming to an end anyway so, if you do nothing, you'll be contracted back in from April 2012.

I contracted out in 1989/1990 (aged 19) and have remained contracted out ever since. The way I look at it, it was a gamble either way. Either;

a) you contract out and that element of your NI contributions go towards a private pension. That remains your money no matter what. You also have the option to take 25% in cash on retirement. The actual amount is subject to the ups and downs of the market and there's a bit of luck involved whether you happen to hit retirement age on a stockmarket crest or in a dip.

b) you pay your NIC's to the government. They spend it. You get a state pension (or not) based on the rules in force at that time which, unless you're close to retirement now, are anyone's guess.

EDIT : Incidentally, unless you were older than mid-forties when you contracted out, it's fairly unlikely that it was missold.

The fact that it might not be performing well (for now) doesn't mean too much.

[Viney]

Cheers Tam. I was of a similar age when i done the same. So what happens to the money sitting in that account? Does it just sit there and earn interest kind of thing, then when i reach 65, it gets paid to me somehow? I will wander into santander and ask them i suppose.

[TamSV]

Yep, the fund will sit there and will be invested (and subject to management fees).

As it's a private pension you should be able to take it before 65, unlike the S2P part of the state pension which you can only get at state retirement age (whatever that happens to be by the time we retire).

It's a gamble, but so was staying contracted in. It's risk v risk. I think the real question is would you, if you had the choice, take that money you now have in your fund and pay it all over to the Government in tax in the hope that you'll get a better state pension in 20 odd years time?

For me, I think it's quite likely that the earnings related part of the state pension will have quietly disappeared by the time I retire so I would rather stick the fund on Trap 2 at Perry Barr than have it "invested" with the Government.

EDIT : Oops nearly forgot this bit.

DISCLAIMER : The above is my personal opinion for discussion only and should not be taken as financial advice given by my firm.

[TamSV]

If anyone else is wondering about this then you MIGHT have been mis-sold if;

- you were over 45 when you contracted out OR
- you were actively advised to remain contracted out after about age 55 OR
- you can prove that you were not told there was an investment risk (pretty unlikely as all the documentation by then included the "investments can go up or down" bit)

Whatever you do, DO NOT give any money up front to firms that say they will get you some kind of compensation. Contracting out of SERPS was pretty difficult to mis-sell and most complaints will fail.

I too opted out about 1992, I havent ever had any correspondence about it since, but I've moved about 5 times since

[Viney]

Originally Posted by TamSV

Yep, the fund will sit there and will be invested (and subject to management fees).

As it's a private pension you should be able to take it before 65, unlike the S2P part of the state pension which you can only get at state retirement age (whatever that happens to be by the time we retire).

It's a gamble, but so was staying contracted in. It's risk v risk. I think the real question is would you, if you had the choice, take that money you now have in your fund and pay it all over to the Government in tax in the hope that you'll get a better state pension in 20 odd years time?

For me, I think it's quite likely that the earnings related part of the state pension will have quietly disappeared by the time I retire so I would rather stick the fund on Trap 2 at Perry Barr than have it "invested" with the Government.

EDIT : Oops nearly forgot this bit.

DISCLAIMER : The above is my personal opinion for discussion only and should not be taken as financial advice given by my firm.

Ok. Do you think that i would be able to take the money and invest it in a proper pension? Or a BMW convertable (more this option)

[TamSV]

"Yes" to the first. "Not yet" to the second.

Find a decent local Independent Financial Adviser (not the bank - they tend to be reps for particular products) and get some retirement planning done. They can help you invest your money somewhere that better suits your attitude to risk and the amount of involvement you want in managing that money.

When you're 60 you'll thank your 40 year old self for it.

[Viney]

Originally Posted by TamSV

"Yes" to the first. "Not yet" to the second.

Find a decent local Independent Financial Adviser (not the bank - they tend to be reps for particular products) and get some retirement planning done. They can help you invest your money somewhere that better suits your attitude to risk and the amount of involvement you want in managing that money.

When you're 60 you'll thank your 40 year old self for it.

Cheers Tam. Its something that i seriously need to think about as i have no provision for my retirement other than my evil dasterdly plan, which if im honest, is a belter, but not very practical.