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Anyone know much about pensions?

tenchy

Rain maker
Administrator
First: no responses will be treated as legally binding and accurate advice!

I know we have several retired and approaching retirement members, so I'm guessing some have had advice and experience first hand.

Just looking for some facts and thoughts.

So, firstly many many years ago I opted out of SERPS. whatever that means.
I'm assuming I haven't opted back in.
At that time I took out a private pension and back then I chose my requirement age to be 55. (yes, I was young and had much to learn)
They are writing saying nearly time etc (53 now)

I currently have a pension with current employer, as obligated too. It's only 2 years old.

I also have 2 (reason unknown) from my previous job. Nothing is going into those but they are still charging me to "administer" it, so I am thinking it's best to divert that money to one of the others.

I'm thinking the one I took out years ago.

But what happens when I get to 55. Is it like a mortgage and it ends and I have to choose options?
What are my options.
Can I start taking a pension from it? Does it go on till I croak?
If I could afford to would /could/should I carry paying my "stamp" to get the government pittance if I last till about 97 which will probably be my retirement age by then?

How's it all work?
 

Lindsay Pennell

Active Member
Premium Member
I would strongly advise you to get a session with a pensions adviser. The whole contracted out of SERPS thing was a bit of a con to sell insurance/pension policies that largely didn't perform. As a result of contracting out, your state pension entitlement has been reduced to a degree.
Each of the pensions you have need to be looked at to assess whether they should be kept or not. If any are defined benefit (otherwise known as final salary) they usually should be kept and will begin to pay out to you at the defined pension age for that scheme. If however they are "money purchase" schemes then their performance needs to be seen to consider whether they should be left to run or merged into another either existing or new scheme. Likewise the private pension that replaced your SERPS scheme.
What you need to do is collect together details of all the schemes, make sure the administrators of them all have your current address, and find out the age at which they pay out. You can get statements from them all.
I hope that helps
 

oldgeezer

Always on
Premium Member
As aboveabove, get professional advice. I lost s**t loads from mine but got into a good advisor ( Independent) and don't leave it till it's too late.
The rules are very strict and change all the time and it is very confusing, to me anyway.
 

Phill104

Always on
Premium Member
Totally agre, go,to a,good independent adviser. It is worth every penny. While I am only 47, I have already had 2 pension schemes closed and it was only down to an adviser that I managed to not loose a large chunk of cash. Fortunately I have been with my current employer for 20years now and they have only had me in the one scheme and a good one at that.
 

Hatter

Always on
Premium Member
Hi Steve,
I have 41 years' experience of working in the pensions industry if that counts!
(I'm a technician, not an adviser though. That means I can look out of the window & tell you whether the sun is shining, but I can't tell you whether to take an umbrella with you when you go out!)

> I opted out of SERPS. whatever that means.
That means your State pension will be reduced and the National Insurance contributions that would have gone towards your State pension have been redirected into your private pension instead.

> I'm assuming I haven't opted back in.
Contracting-out ended in 2012 so you will have been "opted back in" then.

> But what happens when I get to 55. Is it like a mortgage and it ends and I have to choose options?
Depends on the contract. Most of the modern ones (1988 onwards?) can just be continued with a change of pension date. Some others may need you to take action. It's also possible that some investment funds need action if they have a guarantee that there won't be a market value reduction (MVR) at the selected pension date.

>Can I start taking a pension from it? Does it go on till I croak?
Generally, you can start taking your pension at any time between age 55 and age 75. Once you've bought an annuity, it's payable for life.

> If I could afford to would /could/should I carry paying my "stamp" to get the government pittance if I last till about 97 which will probably be my retirement age by then?
That's advice. I don't do that!

> How's it all work?
I'm happy to answer more questions. You can PM me or keep it public - up to you!
 

paulmag

Always on
Honorary Life Member
The selected retirement age is always optimistic amd a guide you shoild be a ble to carry on building.......get some pro advise much depends on what your pensions are
 

hooferinsane

EXIF Seeker
Super Moderator
I am close to 60 and somewhat confused re pensions. I am self employed and have an NHS pension. For me, looking at people that want to manage your pension for you, you should read the small print and see what percentage they will take off of you. One thing to be careful of is that you don't go over the government's lifetime limit (they change this quite frequently) If you do go over that, you start to get hit for 40% tax then on pension above that amount.
 

Lindsay Pennell

Active Member
Premium Member
which is why investments should be actively managed. Even then they can go down as well as up, and under current economic pressures (Trump vs China, Brexit) the market is at best volatile and at worst really scary, but I've managed 6% in the last year by actively managing my SIPP. But I am interested in economics and make the time to monitor my investments and buy/sell as necessary.
 

balami

Always on
Premium Member
I'm 60 this year and have just retired. I'll be taking my final salary pensions on my birthday, the only real decision being how much to take as a tax free lump sum (news lens lol).

I also have a separate pension fund subject to the ebbs and flows of the stock market. The key thing here is that you don't have to buy an annuity with the fund. If you do, you'll have a guaranteed income for life. When you die, with some exceptions, it will die with you and anything left in the fund is taken by the annuity provider.

Here's the alternative. Don't buy an annuity and draw down regular amounts from the fund, whilst what's left in the fund continues to be invested, and hopefully grows.
It's a gamble, but when you die anything left in the fund becomes part of your estate to be inherited by your chosen recipients.

I've simplified it, and there are many ifs and buts. As above, get yourself an advisor.
 

Hatter

Always on
Premium Member
you don't have to buy an annuity with the fund.
As you say - it's a gamble.
Annuities are costed to break even at average life expectancy.
For those that die earlier than average, the annuity provider makes money out of them.
But those that live longer than average make money out of the annuity provider.
Generally, the "profit" made on the first group of people is used to make up the shortfall for the second group.

I personally think the annuity route is less risky - you're guaranteed a pension for life, whatever happens.
If you go down the drawdown route and die sooner rather than later, there will be some money left for your family, but if you live to get a telegram from King William, you might run out of money before then....
With a final salary pension as well, the gamble might be worth it, but I'd advise caution before doing drawdown with your entire pension fund.

As just about everyone has said - get financial advice before doing anything.
 

tenchy

Rain maker
Administrator
Thanks all for the replies. I will gather my info and look for an advisor.
But will I come out depressed lol...
 
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