Contracted Out Pensions

[Steve]

I've been notified a few times (including today) recently by my provider that the 'Contracted Out' option from SERPS which I took out many years ago is coming to an end on 6th April this year. This applies to everybody who has contracted out.

They keep sending leaflets which are supposed to explain what this means, but they don't make diddly-squat of sense to me. Can anyone explain in plain old simple terms what this actually means to me, the customer with a simple self-contributed pension.

And please don't make this a pension-bashing thread - I've got a pension, I'm sticking with it, and just want to know how this new rule affects me in real terms.

[electricsceadu]

it means that the contracted out payment into your pension will stop, so less money being payed into the private pension unless you increase your payments
and the money will be payed into serps again


when i contracted back into serps a few years ago when pensions were doing very poorly i would be better off by the time i came to retire
but now dick turpin the tax man thinks i should wait longer for my state pension

[Steve]

[QUOTE=electricsceadu;799588]it means that the contracted out payment into your pension will stop, so less money being payed into the private pension unless you increase your payments
and the money will be payed into serps again


when i contracted back into serps a few years ago when pensions were doing very poorly i would be better off by the time i came to retire
but now dick turpin the tax man thinks i should wait longer for my state pension[/QUOTE]

Is that it, in a nutshell? Blimey.

So that's all these 'explanation' leaflets which have left me baffled actually had to say?

Thanks.

[electricsceadu]

i've not seen them
thats what the basics of what i was told when i contracted back in

if the leaflets are anything like the digi tv ones my mother got then the gov didn't understand themselves
and made a right pigs ear of it
the way they read that she should ring the number and buy a very overpriced tv and digi box off them that would do no more than the digi box she already had

[Steve]

Any financial advisors want to chip in?

[adamr]

A quick google search came up with this :

Contracting out through defined contribution schemes (i.e. money purchase, personal pension and stakeholder arrangements) is to be abolished from 6 April 2012. Anyone contracted out of a defined contribution scheme at that time will automatically be contracted back into the State Second Pension.
Protected Rights benefits built up from contracting-out will become the same as any other benefits in the scheme.

There is a load of information to be found on it here : [url=http://www.pensionsadvisoryservice.org.uk/workplace-pension-schemes/final-salary-schemes/contracting-out-of-serpss2p]Contracting Out of SERPS/S2P - The Pensions Advisory Service (TPAS)[/url]hope this helps clarify it ?

[Steve]

[QUOTE=adamr;799630]A quick google search came up with this :

Contracting out through defined contribution schemes (i.e. money purchase, personal pension and stakeholder arrangements) is to be abolished from 6 April 2012. Anyone contracted out of a defined contribution scheme at that time will automatically be contracted back into the State Second Pension.
Protected Rights benefits built up from contracting-out will become the same as any other benefits in the scheme.

There is a load of information to be found on it here : [URL="http://www.pensionsadvisoryservice.org.uk/workplace-pension-schemes/final-salary-schemes/contracting-out-of-serpss2p"]Contracting Out of SERPS/S2P - The Pensions Advisory Service (TPAS)[/URL]hope this helps clarify it ?[/QUOTE]

Thanks Adam, I've read stuff like that a hundred times both on leaflets and the web, but still don't actually understand what it means to me, the common man in the street. This is my original point.

As I understand it (with made up figures), I currently pay say £150 a month into my pension fund, and get tax relief on it, so the amount that actually goes in is say £190 or something.

What is going to happen after 6th April?

From electricsceadu's post, I'm assuming that if I still pay £150 into my pension, then that's all that will go in, and the other £40 will now go into the government's new 2nd state pension scheme (NEST), and there's nothing I can do to stop this from happening. It's the government's way of making sure everybody in work contributes into at least one pension scheme and replaces the crappy stakeholder pension scheme. So, If I want to continue paying £190 into my private fund, then I'll have to up my payments by £40.

Can anyone confirm this theory?

[Mrmani]

Pension fund

Hello, I'm in the same boat with you, I understand it as follows.
The contracted out contribution from the government to our personal plans will cease and the money they now pay in will go instead to SERPS, regular state pension fund.
Our own personal contribution will not change unless you elect to increase it voluntarily.
I think you are confusing the tax relief on your personal contribution, ie £150 = £190 value
The contracted out payment was a completely separate contribution to your fund from the state which will no longer be made