Pensions

[kevo]

How on earth is anyone meant to understand pensions? Contracting out, contracting in, single tier?

From the little I can work out, my small private plan seems to have halved in value (in terms of what they think I'll receive) over the last few years (aren't they supposed to increase?) - and I should have 'contracted back in' to the 'state second pension' (whatever that means), even though it is apparently now being abolished and replaced with something completely different. WTF? Seriously, how is any normal person meant to understand this stuff?

No doubt the pension providers who probably misadvised me years ago are getting rich on my money, while I'll be left with very little.

 

[dougdeep]

And then there's annuities.

 

[TSB]

How on earth is anyone meant to understand pensions? Contracting out, contracting in, single tier?

From the little I can work out, my small private plan seems to have halved in value (in terms of what they think I'll receive) over the last few years (aren't they supposed to increase?) - and I should have 'contracted back in' to the 'state second pension' (whatever that means), even though it is apparently now being abolished and replaced with something completely different. WTF? Seriously, how is any normal person meant to understand this stuff?

No doubt the pension providers who probably misadvised me years ago are getting rich on my money, while I'll be left with very little.

Depending on what type of pension plan you have, you're likely to have already been contracted back in to the state second pension.
State Pensions:
The standard one is payable to every living resident at their retirement age
The SSP is a state pension plan of sorts, payable to those who have paid enough in National Insurance contributions over their working life.

However, (the complicated part) if you contracted out of the SSP at some point then your NI contributions would instead have been paid into a private pension: allowing you 'greater control' over your money. This was an advisable thing to do around 10 years ago because private plans were, on the whole, performing well.
Since the 2007 market crash and the recession following it, the advise was generally to have your NI contributions going back into the government plan.

If your private pension is 'Defined Contribution', (personal pension plan, stakeholder plan etc) then contributions automatically switched back to the government in 2012.
If your private pension is 'Definited Benefits', (final salary, average salary) then I believe that happens in April 2014 (someone may know better than me on this bit?)

I'd be more than happy to give any advice or information that I can if you pm me: who you're with, what your plan is called and whether you (or your employer) pay into it.

 

[kevo]

Depending on what type of pension plan you have, you're likely to have already been contracted back in to the state second pension.
State Pensions:
The standard one is payable to every living resident at their retirement age
The SSP is a state pension plan of sorts, payable to those who have paid enough in National Insurance contributions over their working life.

However, (the complicated part) if you contracted out of the SSP at some point then your NI contributions would instead have been paid into a private pension: allowing you 'greater control' over your money. This was an advisable thing to do around 10 years ago because private plans were, on the whole, performing well.
Since the 2007 market crash and the recession following it, the advise was generally to have your NI contributions going back into the government plan.

If your private pension is 'Defined Contribution', (personal pension plan, stakeholder plan etc) then contributions automatically switched back to the government in 2012.
If your private pension is 'Definited Benefits', (final salary, average salary) then I believe that happens in April 2014 (someone may know better than me on this bit?)

I'd be more than happy to give any advice or information that I can if you pm me: who you're with, what your plan is called and whether you (or your employer) pay into it.

Thanks - that's very helpful. That was the one main question I had - will I have been automatically contracted back in? As long as I know I don't need to do anything, that's fine.

 

[Lincoln Imp]

As well as making a point about the complexity of it all, the OP also said that his private pension has bombed in recent years.

I spent 17 years contributing to a public sector pension and 24 contributing (rather more) to private plans.

The public sector pension is now paying out three times as much as the private one (I'm actually running a drawdown scheme rather than being ripped off by an annuity provider) and this is one reason why I, a centre-left sort of chap who has voted conservative only once in a dozen general elections, become incandescent when public sector workers dribble on about hard done they are compared to their public sector counterparts. I don't begrudge them their index-linked pensions - I'm eternally grateful for mine - but I just wish that more of them would accept that they really have been rather fortunate in this and other ways.

 

[TSB]

Thanks - that's very helpful. That was the one main question I had - will I have been automatically contracted back in? As long as I know I don't need to do anything, that's fine.

Have just checked and it looks like it's 2016 for Final/Average Salary schemes. So, if you have one of those, it might be worth considering whether you want to wait those two extra years.
If not one of those, you're all sorted already.

Happy to have helped

 

[cunning fergus]

How on earth is anyone meant to understand pensions? Contracting out, contracting in, single tier?

From the little I can work out, my small private plan seems to have halved in value (in terms of what they think I'll receive) over the last few years (aren't they supposed to increase?) - and I should have 'contracted back in' to the 'state second pension' (whatever that means), even though it is apparently now being abolished and replaced with something completely different. WTF? Seriously, how is any normal person meant to understand this stuff?

No doubt the pension providers who probably misadvised me years ago are getting rich on my money, while I'll be left with very little.

You forgot to mention the taxman helping himself too (not least courtesy of Gordon Brown removal of pension dividend credits), its little wonder that people started buying property to fund their retirement as oppose to saving in pension funds. Thankfully the implications of this policy did not cause any lasting damage for the country.

http://www.telegraph.co.uk/finance/...343130/Who-will-end-this-pension-scandal.html

It may get worse too………..

http://www.cityam.com/article/eu-s-proposed-tobin-tax-will-raid-pension-funds-not-france-and-germany

Merry Christmas.

 

[kevo]

Have just checked and it looks like it's 2016 for Final/Average Salary schemes. So, if you have one of those, it might be worth considering whether you want to wait those two extra years.
If not one of those, you're all sorted already.

Happy to have helped

No, it's just a personal plan. A few years ago, they advised me to contract back in to SSP, but I either ignored it or didn't understand (I have a bit of a mental block when it comes to financial stuff). I've now found a letter which seems to say I will automatically been contracted back in from April 2012. So that's good to know...

Now the next confusing thing is what happens when the new single-tier pensions come in!

 

[kevo]

You forgot to mention the taxman helping himself too (not least courtesy of Gordon Brown removal of pension dividend credits), its little wonder that people started buying property to fund their retirement as oppose to saving in pension funds..

That's (fortunately) the one thing I do have... will have to sell-up and move somewhere cheaper to fund my retirement I reckon!

 

[TSB]

Now the next confusing thing is what happens when the new single-tier pensions come in!

Well, I've read this and don't have a bloody clue: https://www.gov.uk/government/polic...ntroducing-a-simple-single-tier-state-pension

So, I'd suggest:
http://www.unbiased.co.uk/pensions

 

[kevo]

Well, I've read this and don't have a bloody clue: https://www.gov.uk/government/polic...ntroducing-a-simple-single-tier-state-pension

So, I'd suggest:
http://www.unbiased.co.uk/pensions

This site is pretty good actually - you can chat to an adviser for free online:

http://www.pensionsadvisoryservice.org.uk/

 

[dougdeep]

I just tried the pension credit calculator and whatever figures I put in it says I could get £0.00 per week.

 

[LamieRobertson]

I just tried the pension credit calculator and whatever figures I put in it says I could get £0.00 per week.

Far too much

 

[Silkster365]

I do have a background in Pensions as it was the first admin job I took after leaving school. But I remember how many people used to write in/call up absolutely dismayed by what they were going to receive from their pension. Most people had no option than to keep working. Since then I have made it my mission to make sure I stay on top of my pensions almost monthly, weekly in some cases and make sure I monitor the investment performance, moving it around when I think I should do. I am still on track to retire on my full salary come age 55 (i'm currently 35) and, whilst there is a long way to go, I really believe active management and getting to grips with your pension is the only way

 

[Steve Foster]

How on earth is anyone meant to understand pensions? Contracting out, contracting in, single tier?

From the little I can work out, my small private plan seems to have halved in value (in terms of what they think I'll receive) over the last few years (aren't they supposed to increase?) - and I should have 'contracted back in' to the 'state second pension' (whatever that means), even though it is apparently now being abolished and replaced with something completely different. WTF? Seriously, how is any normal person meant to understand this stuff?

No doubt the pension providers who probably misadvised me years ago are getting rich on my money, while I'll be left with very little.

If you would welcome a chat or a meeting at our Office in Worthing (first meeting without cost) feel free to contact us. Investment Solutions Wealth Management Ltd are a Chartered firm of Independent Financial Advisers based in Worthing.
We will provide jargon free & easy to understand advice. Tel 01903 214640 or www.investment-solutions.co.uk

................. however, before you do ................. post your score on the Predictor!

https://nortr3nixy.nimpr.uk/showt...-Hull-FA-Cup-5th-round-replay-Score-Predictor

 

[Dean Deyn]

As well as making a point about the complexity of it all, the OP also said that his private pension has bombed in recent years.

I spent 17 years contributing to a public sector pension and 24 contributing (rather more) to private plans.

The public sector pension is now paying out three times as much as the private one (I'm actually running a drawdown scheme rather than being ripped off by an annuity provider) and this is one reason why I, a centre-left sort of chap who has voted conservative only once in a dozen general elections, become incandescent when public sector workers dribble on about hard done they are compared to their public sector counterparts. I don't begrudge them their index-linked pensions - I'm eternally grateful for mine - but I just wish that more of them would accept that they really have been rather fortunate in this and other ways.

You forget that a vast number of private sector employees (ie those working for large corporations, banks etc) are on final salary schemes (albeit many of these have been closed to new entrants in recent years and more and more are now closing to new contributions). And, typically, these private sector final salary schemes have been more generous that the public sector ones. So it's not simply public sector pension = good, private sector pension = bad. In fact, those who are doing best are those on PRIVATE sector final salary schemes.

 

[TSB]

We will provide jargon free & easy to understand advice. Tel 01903 214640 or www.investment-solutions.co.uk

................. however, before you do ................. post your score on the Predictor!

https://nortr3nixy.nimpr.uk/showt...-Hull-FA-Cup-5th-round-replay-Score-Predictor

 

[Lincoln Imp]

You forget that a vast number of private sector employees (ie those working for large corporations, banks etc) are on final salary schemes (albeit many of these have been closed to new entrants in recent years and more and more are now closing to new contributions). And, typically, these private sector final salary schemes have been more generous that the public sector ones. So it's not simply public sector pension = good, private sector pension = bad. In fact, those who are doing best are those on PRIVATE sector final salary schemes.

...and the proportion of private sector employees and the self-employed under, say, 40 who get better pensions than those in the public sector?

 

[kevo]

This article makes the single tier reforms a bit easier to understand:

http://www.theguardian.com/money/2014/feb/10/poorer-state-pension-contracted-in

 

[Shropshire Seagull]

Depending on what type of pension plan you have, you're likely to have already been contracted back in to the state second pension.
State Pensions:
The standard one is payable to every living resident at their retirement age
The SSP is a state pension plan of sorts, payable to those who have paid enough in National Insurance contributions over their working life.

However, (the complicated part) if you contracted out of the SSP at some point then your NI contributions would instead have been paid into a private pension: allowing you 'greater control' over your money. This was an advisable thing to do around 10 years ago because private plans were, on the whole, performing well.
Since the 2007 market crash and the recession following it, the advise was generally to have your NI contributions going back into the government plan.

If your private pension is 'Defined Contribution', (personal pension plan, stakeholder plan etc) then contributions automatically switched back to the government in 2012.
If your private pension is 'Definited Benefits', (final salary, average salary) then I believe that happens in April 2014 (someone may know better than me on this bit?)

I'd be more than happy to give any advice or information that I can if you pm me: who you're with, what your plan is called and whether you (or your employer) pay into it.

I thought SSP was Statutory Sick Pay
What's SERPS then [State Earnings Related Pension Scheme], is that not what you mean by SSP

I agree, to the man in the street, pensions can be a fecking minefield.