Signing out of SURPS.
Discussion
As title I did this at 16, a nice man from the Pry came to my house and talked me into signing out of SURPS, I didn't take a pension with them and in later life after having a bad experiance I now have no pension of any type, how does the SURPS affect me , I'm now 42 I intend selling my house at retirment to give something to my kids and to have some put by, I'm not after pension advice I just want to know why the pension guy talked me into this and why I suspect its a deeply bad thing.
Thanks, Chris.
Thanks, Chris.
The same happened to me except it was the manager of my football team that convinced all the young lads to sign on the dotted line!
Hopefully someone in the profession will be able to advise if it has cost us a fortune!
However from my limited research the differences seems to be a few pounds per week and nothing to lose sleep over.
Plus by opting out from what i understand you can get access to the money at 55. Plus if you die your spouse gets the cash.
Again this is my understanding and it could be wrong!
Hopefully someone in the profession will be able to advise if it has cost us a fortune!
However from my limited research the differences seems to be a few pounds per week and nothing to lose sleep over.
Plus by opting out from what i understand you can get access to the money at 55. Plus if you die your spouse gets the cash.
Again this is my understanding and it could be wrong!
rumple said:
As title I did this at 16, a nice man from the Pry came to my house and talked me into signing out of SURPS, I didn't take a pension with them and in later life after having a bad experiance I now have no pension of any type, how does the SURPS affect me , I'm now 42 I intend selling my house at retirment to give something to my kids and to have some put by, I'm not after pension advice I just want to know why the pension guy talked me into this and why I suspect its a deeply bad thing.
Thanks, Chris.
AIUI if you opted out of SERPS you would have taken out a private pension with the Pru. You can't just "opt out" without opting IN elsewhere.Thanks, Chris.
So you will have a private pension with the Pru. Both you and your employer would have started to pay lower rates of National Insurance but, instead, paid Superannuation into the Pridentials pension scheme.
Countdown, that may not strictly be true!
The OP has prob contracted out but not via his employer. He would have been getting a rebate every year which was paid into I assume the Pru pension. The employer would not have reduced NI payments. It would have come from the DSS.
As to whether it was a good idea, very difficult to work out. In the main the younger you were the less likely an impact on state pension (only a very loose ROT!!)
If you get a valuation from The Pru you maybe pleasantly surprised as to how much is in there!!! You are governed by the usual pension rules.
The OP has prob contracted out but not via his employer. He would have been getting a rebate every year which was paid into I assume the Pru pension. The employer would not have reduced NI payments. It would have come from the DSS.
As to whether it was a good idea, very difficult to work out. In the main the younger you were the less likely an impact on state pension (only a very loose ROT!!)
If you get a valuation from The Pru you maybe pleasantly surprised as to how much is in there!!! You are governed by the usual pension rules.
I contracted out and until 2012 when it was abolished i could see the payments from hmrc in my pension fund. As i understand it serps was only the income related part of the state pension.
The state pension is going to be a fixed amount soon rather than related to income so i dont see how i can be worse off.
I can also take my serps part of my pension after 55 rather than 67.
The state pension is going to be a fixed amount soon rather than related to income so i dont see how i can be worse off.
I can also take my serps part of my pension after 55 rather than 67.
rumple said:
As title I did this at 16, a nice man from the Pry came to my house and talked me into signing out of SURPS, I didn't take a pension with them and in later life after having a bad experiance I now have no pension of any type, how does the SURPS affect me , I'm now 42 I intend selling my house at retirment to give something to my kids and to have some put by, I'm not after pension advice I just want to know why the pension guy talked me into this and why I suspect its a deeply bad thing.
Thanks, Chris.
Contracting out of SERPS (the State Earnings Related Pension Scheme, which then became renamed as the State Second Pension) is a reasonably straightforward concept, but can be tricky to work out whether or not you are better off having done so. Basically, you give up some of your entitlement to a State pension in return for your own pension fund with, in this case, the Pru.Thanks, Chris.
In more detail, the State pension you receive (i.e. the old age pension from the Government) is made up of two parts: the Basic State Pension (which is a flat rate paid to everyone who has paid enough years of National Insurance) and the State Earnings Related Pension Scheme (which, roughly, is higher the more you earn).
What you did was to opt-out of this earnings related part. In return, some of your National Insurance payments (and your employer's National Insurance payments) were diverted into a fund with the Prudential. This fund grows with investment returns and, at retirement, you buy a pension with it. So you get your Basic State Pension plus this Pru pension. The impossible part is knowing whether or not the Pru pension will be bigger than the State pension you gave up.
You should get statements from the Pru each year telling you how much the pension you have with them is worth - if not, contact them to find out why (for example, you might have moved over the years and not told them). You can also fill in a form (try here for help: https://www.gov.uk/state-pension-statement) which tells you how much State pension you might receive.
For what it's worth (and accepting that everybody's circumstances are different), I contracted-out of SERPS as soon as I could and am happy to have done so. I'm the same age as you so have no idea yet whether it means I will be better off having done so. But I'm happy having "a bird in the hand" - it will be a lot more difficult for the Government to take this fund away from me than it will be for them to reduce/remove my entitlement to a State pension.
rumple said:
As title I did this at 16, a nice man from the Pry came to my house and talked me into signing out of SURPS, I didn't take a pension with them and in later life after having a bad experiance I now have no pension of any type, how does the SURPS affect me , I'm now 42 I intend selling my house at retirment to give something to my kids and to have some put by, I'm not after pension advice I just want to know why the pension guy talked me into this and why I suspect its a deeply bad thing.
Thanks, Chris.
Rumple,Thanks, Chris.
The Pru advisers used to get commission for selling pensions and by you opting out of the state pension then some money would therefore start going to the Pru instead, so commission would then have been paid to the adviser. I gather they used to knock on your door and sign you up. Naturally they wouldn't have done this for nothing so this may answer your question as to "why the pension guy talked me into this".
That is not necessarily bad advice because it could have been in your interests and suited your attitude to risk at the time it depends on how you were advised.
Many advisers no longer advise on 'opting out' and nowadays you aren't allowed to 'opt out' in the same way that you were advised to.
I am not a financial adviser so do not take this as formal financial advice.
I also contracted out of SERPS many years ago.
Having heard what you get out for the money you put in, and given the fact you _will_ keep this entitlement if/when the upcoming changes to the state pension come in, I'm starting to think this was a bad idea.
I also understand that you can pay a lump sum for the years of SERPS entitlement you missed for about £500 a year.
However, if I contracted out in order to contract in to a private pension, am I actually allowed to buy my SERPS entitlement in retrospect?
Having heard what you get out for the money you put in, and given the fact you _will_ keep this entitlement if/when the upcoming changes to the state pension come in, I'm starting to think this was a bad idea.
I also understand that you can pay a lump sum for the years of SERPS entitlement you missed for about £500 a year.
However, if I contracted out in order to contract in to a private pension, am I actually allowed to buy my SERPS entitlement in retrospect?
Gassing Station | Finance | Top of Page | What's New | My Stuff