Opted out of SERPs years ago, should i be worried?
Discussion
Ok, cards on the table, i have no idea what this means but long story short i did this years and years ago. I have now got a teachers pension and have had for a long time, but am i right in thinking i get a state pension at retirement as well? And if so, what is this SERPs thing, is it still in place, is it having any effect, should i contract back in and if so, how?
I'm a bit of an eight year old when it comes to complex financial stuff so if anyone can do fisher price answers i would be very, very grateful.
I'm a bit of an eight year old when it comes to complex financial stuff so if anyone can do fisher price answers i would be very, very grateful.
You can obtain a State Pension Forecast using a form (BR19) from HMR&C (either on line or paper based):
http://www.direct.gov.uk/pdfs/state-pension-statem...
http://www.direct.gov.uk/pdfs/state-pension-statem...
State Pension:
How much - depending on how much National Insurance Contributions you made prior to contracting out.
You can top up via additional contributions (if you want).
You can defer taking state pension until late age (i.e. 70) if you defer taking state pension the payment you will eventually receive will be 10.4% per annum higher for each year you defer.
If you were contracted out this may have been via your Teacher's pension (or via an appropriate personal pension plan)?
How much - depending on how much National Insurance Contributions you made prior to contracting out.
You can top up via additional contributions (if you want).
You can defer taking state pension until late age (i.e. 70) if you defer taking state pension the payment you will eventually receive will be 10.4% per annum higher for each year you defer.
If you were contracted out this may have been via your Teacher's pension (or via an appropriate personal pension plan)?
RESSE said:
State Pension:
How much - depending on how much National Insurance Contributions you made prior to contracting out.
You can top up via additional contributions (if you want).
You can defer taking state pension until late age (i.e. 70) if you defer taking state pension the payment you will eventually receive will be 10.4% per annum higher for each year you defer.
If you were contracted out this may have been via your Teacher's pension (or via an appropriate personal pension plan)?
This was from a few years before i started teaching, just working in a normal job at the time. I'm just a bit worried something's been done that i didnt fully understand and that when i hit retirement it'll be an oh sHow much - depending on how much National Insurance Contributions you made prior to contracting out.
You can top up via additional contributions (if you want).
You can defer taking state pension until late age (i.e. 70) if you defer taking state pension the payment you will eventually receive will be 10.4% per annum higher for each year you defer.
If you were contracted out this may have been via your Teacher's pension (or via an appropriate personal pension plan)?
t moment.Don't worry yourself as it be sorted.
Pensions are relatively straightforward once you get past the technical terms (bullst).
All someone wants to know is how much will I receive and when can I have it.
HMRC's website has some useful information.
http://www.hmrc.gov.uk/nic/basic-state-pension.htm
Pensions are relatively straightforward once you get past the technical terms (bulls
t).All someone wants to know is how much will I receive and when can I have it.
HMRC's website has some useful information.
http://www.hmrc.gov.uk/nic/basic-state-pension.htm
The State pension forcast should be correct and it will show each part of all the various State benefits that make up you total State pension.
In my view, and assuming you have paid full State pension contributions, you'll get:
1. The full State pension available from your State retirment age
2. Nothing for your period contracted out of SERPS
3. Your Teachers' Pension for the period you were a member assuming you have not tranferred it, from your normal retirement age.
For completeness, note that as you were contracted out of SERPS, the Teachers' Pension Scheme benefit must be at least as good of what you would have got from SERPS had you not been contracted out. In fact, it will be considerably more. The contracting out decsion was not yours but made by your employer at the time because £ for £ you will get more pension from the Teachers Scheme than from SERPS.
As a separate matter, as you will be getting a pension from the Teachers' Pension Scheme, be aware that before you start to receive it you will be asked to sign a statement to the effect that if after retiring and starting to receive your pension you take up employment again, you MUST advise the administrators accordingly. This is because the regulations of the Teachers' Scheme contain what are known as "abatement provisions" whereby the pension is reduced to take account of what you're earning once going back into employment. Many teachers have failed to advise the adnministrators about this and so they have had their pension overpaid. In many cases the amount overpaid is considerable..say £20,000-£50,000...and without doubt the administrators will recover the overpaid amount from you as fast as they can as they are legally entitled to do. This means a nasty financial surprise for many ex teachers!
R.
In my view, and assuming you have paid full State pension contributions, you'll get:
1. The full State pension available from your State retirment age
2. Nothing for your period contracted out of SERPS
3. Your Teachers' Pension for the period you were a member assuming you have not tranferred it, from your normal retirement age.
For completeness, note that as you were contracted out of SERPS, the Teachers' Pension Scheme benefit must be at least as good of what you would have got from SERPS had you not been contracted out. In fact, it will be considerably more. The contracting out decsion was not yours but made by your employer at the time because £ for £ you will get more pension from the Teachers Scheme than from SERPS.
As a separate matter, as you will be getting a pension from the Teachers' Pension Scheme, be aware that before you start to receive it you will be asked to sign a statement to the effect that if after retiring and starting to receive your pension you take up employment again, you MUST advise the administrators accordingly. This is because the regulations of the Teachers' Scheme contain what are known as "abatement provisions" whereby the pension is reduced to take account of what you're earning once going back into employment. Many teachers have failed to advise the adnministrators about this and so they have had their pension overpaid. In many cases the amount overpaid is considerable..say £20,000-£50,000...and without doubt the administrators will recover the overpaid amount from you as fast as they can as they are legally entitled to do. This means a nasty financial surprise for many ex teachers!
R.
The Leaper said:
The State pension forcast should be correct and it will show each part of all the various State benefits that make up you total State pension.
In my view, and assuming you have paid full State pension contributions, you'll get:
1. The full State pension available from your State retirment age
2. Nothing for your period contracted out of SERPS
3. Your Teachers' Pension for the period you were a member assuming you have not tranferred it, from your normal retirement age.
For completeness, note that as you were contracted out of SERPS, the Teachers' Pension Scheme benefit must be at least as good of what you would have got from SERPS had you not been contracted out. In fact, it will be considerably more. The contracting out decsion was not yours but made by your employer at the time because £ for £ you will get more pension from the Teachers Scheme than from SERPS.
As a separate matter, as you will be getting a pension from the Teachers' Pension Scheme, be aware that before you start to receive it you will be asked to sign a statement to the effect that if after retiring and starting to receive your pension you take up employment again, you MUST advise the administrators accordingly. This is because the regulations of the Teachers' Scheme contain what are known as "abatement provisions" whereby the pension is reduced to take account of what you're earning once going back into employment. Many teachers have failed to advise the adnministrators about this and so they have had their pension overpaid. In many cases the amount overpaid is considerable..say £20,000-£50,000...and without doubt the administrators will recover the overpaid amount from you as fast as they can as they are legally entitled to do. This means a nasty financial surprise for many ex teachers!
R.
Tanks for the heads up on the retirement thing!In my view, and assuming you have paid full State pension contributions, you'll get:
1. The full State pension available from your State retirment age
2. Nothing for your period contracted out of SERPS
3. Your Teachers' Pension for the period you were a member assuming you have not tranferred it, from your normal retirement age.
For completeness, note that as you were contracted out of SERPS, the Teachers' Pension Scheme benefit must be at least as good of what you would have got from SERPS had you not been contracted out. In fact, it will be considerably more. The contracting out decsion was not yours but made by your employer at the time because £ for £ you will get more pension from the Teachers Scheme than from SERPS.
As a separate matter, as you will be getting a pension from the Teachers' Pension Scheme, be aware that before you start to receive it you will be asked to sign a statement to the effect that if after retiring and starting to receive your pension you take up employment again, you MUST advise the administrators accordingly. This is because the regulations of the Teachers' Scheme contain what are known as "abatement provisions" whereby the pension is reduced to take account of what you're earning once going back into employment. Many teachers have failed to advise the adnministrators about this and so they have had their pension overpaid. In many cases the amount overpaid is considerable..say £20,000-£50,000...and without doubt the administrators will recover the overpaid amount from you as fast as they can as they are legally entitled to do. This means a nasty financial surprise for many ex teachers!
R.
Just for clarity, this serps thing was long before i went into teaching. Do i need to contract back in though or should i mjust leave it as is?
I assume you mean whether or not contracting out was the right decision. Bear in mind that the decsion was not yours it was your employer's.
It's not a straightforward question as there are a lot of points to consider. In purely pension terms you will not have lost out. On cost grounds-SERPS v.TPS- you are probably £s up. The big question is: what else might you have done with the money, and that money would not include the employer's contribution? Of course, you'll never know the answer.
Overall, you will be beter off with what happened, IMHO.
R.
It's not a straightforward question as there are a lot of points to consider. In purely pension terms you will not have lost out. On cost grounds-SERPS v.TPS- you are probably £s up. The big question is: what else might you have done with the money, and that money would not include the employer's contribution? Of course, you'll never know the answer.
Overall, you will be beter off with what happened, IMHO.
R.
RESSE said:
NEST from October 2012.
Sorry, but this statement is wrong, the new regs. are auto-enrolment , which is for mandatory pension contributions for both employer & ultimately the employee also. NEST is one possible provider for employers to use. Individuals have the choice whether to join or not but will be auto- enrolled back in every 3 years unless they opt-out again.To the OP, nothing to worry about, SERPS was simply a redirection of NI , many big schemes contracted out as they pay reduced NI. If done vain an app, the benefits can be taken in exactly the same way as a personal pension with tax free cash entitlement as well.
thomson said:
RESSE said:
NEST from October 2012.
Sorry, but this statement is wrong, the new regs. are auto-enrolment , which is for mandatory pension contributions for both employer & ultimately the employee also. NEST is one possible provider for employers to use. Individuals have the choice whether to join or not but will be auto- enrolled back in every 3 years unless they opt-out again.To the OP, nothing to worry about, SERPS was simply a redirection of NI , many big schemes contracted out as they pay reduced NI. If done vain an app, the benefits can be taken in exactly the same way as a personal pension with tax free cash entitlement as well.
ks.BUMP!
I also opted out of SERPS way back in about 1989. To be honest I did not really know what I was doing and an agent bamboozled me with financial technical stuff that I did not (and still do not) understand. Basically along the lines of "I doubt that there will be any real state pension worth its salt".
I will say that my working history has been very on/off so how does that work out?
Now I see that there are SERPS compensation companies. Are they any good? Do they work? And will I get anything out of them? And if I do does that mean a massive reduction in state pension come the time. (I am 48).
I would put a link to a company that I have found but I expect it breaks posting rules.
Yes, yes, I am expecting the usual "Compensation culture" posts! But any real advice would be helpful.
I also opted out of SERPS way back in about 1989. To be honest I did not really know what I was doing and an agent bamboozled me with financial technical stuff that I did not (and still do not) understand. Basically along the lines of "I doubt that there will be any real state pension worth its salt".
I will say that my working history has been very on/off so how does that work out?
Now I see that there are SERPS compensation companies. Are they any good? Do they work? And will I get anything out of them? And if I do does that mean a massive reduction in state pension come the time. (I am 48).
I would put a link to a company that I have found but I expect it breaks posting rules.
Yes, yes, I am expecting the usual "Compensation culture" posts! But any real advice would be helpful.
Having considered the entire financial services industry from every angle, I conclude that it exists to hoover as much money as possible from every source, and hope that you don't notice. They are in it for themselves, not you dear punter, of whom they hope you die the day you stop paying in. And then they will bill your Estate for the fees. All within regulations of course, and here's to their 35% payrise.
Simpo Two said:
Having considered the entire financial services industry from every angle, I conclude that it exists to hoover as much money as possible from every source, and hope that you don't notice. They are in it for themselves, not you dear punter, of whom they hope you die the day you stop paying in. And then they will bill your Estate for the fees. All within regulations of course, and here's to their 35% payrise.
Having viewed your recent posts in this sub-forum, I suggest you don't bother posting about things you obviously don't understand, and leave it to those who do!
sidicks said:
Having viewed your recent posts in this sub-forum, I suggest you don't bother posting about things you obviously don't understand, and leave it to those who do!
That does not make me incorrect. People in the industry have their heads so far in the system 'understanding' it that they don't see the big picture.What do you do?
in a former role i advised almost entirely to teachers and local government staff so have a pretty thorough understanding.
the period you were opted out was prior to joining the TPS, that is done and you have those benefits in a seperate personal pension somewhere.
when you joined the TPS you would have automatically have been contracted to their scheme and that would have over ridden the previous contracting out pension.
your state pension (basic) has nothing to do with being contracted out.
as things stand when you retire you'll receive pensions from the following sources
1. basic state pension - whenever they decide you should get that (65-67 depending on age, probably older for the younger on here)
2. SSP, serps etc (top up state pension for non members of company schemes based on NI contributions above the basic level) - there have been several versions of this, each progressively worse.
3. your earlier contracted out benefits from whatever pension you transfered these to.
4. your TPS benefits
as long as you remain a member of the TPS and don't get talked into opting into anything else you'll be ok if you have long enough service; the other bits of pension will add onto it in due course. you should have a statement for your SERPS funds. if you are still worried you that you may have a shotfall you can pay a bit extra in but i'd get statements/forecasts for all of your current holdings first.
SERPS and contracting out have all gone now; the state pension is now going to a flat rate anyway, so as time passes the conversation around SERPS and contracting out will become less frequent.
the period you were opted out was prior to joining the TPS, that is done and you have those benefits in a seperate personal pension somewhere.
when you joined the TPS you would have automatically have been contracted to their scheme and that would have over ridden the previous contracting out pension.
your state pension (basic) has nothing to do with being contracted out.
as things stand when you retire you'll receive pensions from the following sources
1. basic state pension - whenever they decide you should get that (65-67 depending on age, probably older for the younger on here)
2. SSP, serps etc (top up state pension for non members of company schemes based on NI contributions above the basic level) - there have been several versions of this, each progressively worse.
3. your earlier contracted out benefits from whatever pension you transfered these to.
4. your TPS benefits
as long as you remain a member of the TPS and don't get talked into opting into anything else you'll be ok if you have long enough service; the other bits of pension will add onto it in due course. you should have a statement for your SERPS funds. if you are still worried you that you may have a shotfall you can pay a bit extra in but i'd get statements/forecasts for all of your current holdings first.
SERPS and contracting out have all gone now; the state pension is now going to a flat rate anyway, so as time passes the conversation around SERPS and contracting out will become less frequent.
Morningside said:
BUMP!
I also opted out of SERPS way back in about 1989. To be honest I did not really know what I was doing and an agent bamboozled me with financial technical stuff that I did not (and still do not) understand. Basically along the lines of "I doubt that there will be any real state pension worth its salt".
I will say that my working history has been very on/off so how does that work out?
Now I see that there are SERPS compensation companies. Are they any good? Do they work? And will I get anything out of them? And if I do does that mean a massive reduction in state pension come the time. (I am 48).
I would put a link to a company that I have found but I expect it breaks posting rules.
Yes, yes, I am expecting the usual "Compensation culture" posts! But any real advice would be helpful.
it depends what your alternative choices were when you were advised to opt out.I also opted out of SERPS way back in about 1989. To be honest I did not really know what I was doing and an agent bamboozled me with financial technical stuff that I did not (and still do not) understand. Basically along the lines of "I doubt that there will be any real state pension worth its salt".
I will say that my working history has been very on/off so how does that work out?
Now I see that there are SERPS compensation companies. Are they any good? Do they work? And will I get anything out of them? And if I do does that mean a massive reduction in state pension come the time. (I am 48).
I would put a link to a company that I have found but I expect it breaks posting rules.
Yes, yes, I am expecting the usual "Compensation culture" posts! But any real advice would be helpful.
if you were a member of a final salary scheme and advised not to join or taken out of that scheme then you have been royally screwed and should seek redress....
or, if you were in employment that offered no pension benefits and simply contracted out of serps in it's basic form then you are probably no worse off and possibly better off.
as of a couple of years ago the contracting out rebate ceased anyway as the government sought to streamline the state pension to a flat rate. this won't affect the money that you have taken and put into the APP for the contracted out contributions, which may add up to a fair sum by now.
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