SERPS

[Panic Button]

I followed advice and contracted out of Serps for several years, but am now contracted back in.

It occurs to me though that I don't really understand it.

The money given to my insurance company for the years out are in a private pension.

What about the years when I am contracted in?

Does the state pension vary in size depending on your earnings, or do you get a separate Serps pension?

[craft1948]

Yes you get extra pension for your Serps contributions.....

[craft1948]

I contracted out and I receive the basic state pension which is about £75.00 per week. My mate always paid Serps and she gets about £125.00 per week.

[craft1948]

bugger...sorry...the basic pension is £95 not £75

[Panic Button]

Thanks.

Pensions are so confusing.

I have ended up with several personal pensions due to job changes, conflicting advice etc. Two of them have a retirement age of 60, and the rest 65. (Should be 66 now!)

I won't retire at 60, so what happens to those two then?

[buildersmate]

I agree it is incredibly complicated and it took me about a day of working through some 3 years ago when I tried to get my head around it.

The Basic State Pension is the thing that gets talked about so much in the news. It depends on NI contributions, and from next year one needs at least 30 contribution years to get the full amount. Otherwise it is a proportion. When can draw it is the other topic in the news - 65 for men, 60 for women but rising progressively to 65 also from April 2010. It is this 65 age that is in the news right now as it will rise in time - 68 has already been announced.

If one is 'contracted in', one also gets an additional pension from the state. This starts from the same date as the state basic pension, and depends on earnings. It used to be called the SERPS scheme, but is now called the Second State Pension. The Pensions Service maintains the contribution record of individuals and you can get a pension forecast of the combination of Basic plus Additional (SERPS+2SP) through the DirectGov website.
If one is 'contracted out', one gets one's additional pension via a private sector provider. Getting forecasts from this can only be done from the company providing it. When people talk about 'pension pots' these are the sums of money held by the investment companies on an individual's behalf that will provide the pension. When one draw this is up to you (there are Government and scheme rules about the minimum age when it can be drawn)

Most people will get their pension from various sources - not necessarily starting at the same date.

Many years ago (1970s and earlier), there was a scheme called 'Graduated Pension'. This was the predecessor to SERPS and older people may find some entitlement to a bit extra from it. The Pension Service maintains the individual record on this scheme and it is included in pension forecasts.

See here for more general info about these schem

[buildersmate]

See here for more general info about these schemes.
http://www.direct.gov.uk/en/Pensionsandretirementplanning/StatePension/index.htm

[buildersmate]

There is probably a bit more I should have added about being contracted out.
The Government insisted that private sector providers should guarantee the minimum sums that would be forthcoming from private schemes, to a level at least equivalent to that of being contracted into SERPS. So you will often find the private scheme split into 2 pots - one called guaranteed minimum pension and one not.

[Panic Button]

Thanks BM, very useful.

It must be a sign that I am getting older that I am worrying about pensions! (I've just turned 50)

[Captain Spod]

Buildersmate is correct Re: GMP (Guaranteed Minimum pension) from a private provider, but not ordinary contracted-out or Protected Rights "pots". These do not have to provide a set monetary value, this is down to investement growth and charges from the fund. There are rules on how the pension is paid out if the pensioner is married or in a civil partership. BTW, as you have just turned 50, you have a window in which you can take benefits from your private pensions if you want. It is not right for most people, and you should take advice before doing so, but this particular window closes in April and won't open again until you are 55.