Man of Honour
Hi all
Just made a mind blowing discovery... which I thought I would share as no doubt a few here are in the same position.
Back in 1991 I opted out of SERPS (now Second State Pension) and had this part of my NI payed into a private pension. This up to a little while ago due to low returns on pensions was told to be a bad mistake. Come 2017, the Second State Pension is abolished and I will resume full NI payments into the new single state pension...which is capped at £144 a week regardless of how much you payed in.
Here is the thing, as I have over 10 years before retirement I will rebuild to the full state pension, AND have a private pension pot of over 35k (in effect for free) and I'll have 25% of that tax free on retirement lump sum. Any thoughts on this ?, seems the people who thought they made a bad opt out choice in the late 80s / 90s now have a big big win (basically money for nothing)
Those that didn't opt out will of been paying to get a bigger state pension pot for nothing due to 2017 capping as you only have to earn your £144 a week entitlement, which I will do even though I opted out.
Here is the quote form the article I read...
Big winners are those who contracted out into a personal pension, even though we have been told for the last decade that this was the wrong thing to do. They get to keep their pots – which could be worth as much as £100,000 – and can still build up their state pension from £107.45 to £144 at the rate of £4.11 a year. Anyone in this group with at least 10 years to state pension age when the new rules take effect in 2017 will be able to get the same state pension as someone who remained contracted in, and will get to keep their contracted-out pot as well. It’s maybe not what ministers wanted, but it’s just one of the many consequences of unravelling 35 years of complexity in the state pension system
(the above may be flawed thinking, but I read about this online and will confirm tomorrow with my pension company)
Just made a mind blowing discovery... which I thought I would share as no doubt a few here are in the same position.
Back in 1991 I opted out of SERPS (now Second State Pension) and had this part of my NI payed into a private pension. This up to a little while ago due to low returns on pensions was told to be a bad mistake. Come 2017, the Second State Pension is abolished and I will resume full NI payments into the new single state pension...which is capped at £144 a week regardless of how much you payed in.
Here is the thing, as I have over 10 years before retirement I will rebuild to the full state pension, AND have a private pension pot of over 35k (in effect for free) and I'll have 25% of that tax free on retirement lump sum. Any thoughts on this ?, seems the people who thought they made a bad opt out choice in the late 80s / 90s now have a big big win (basically money for nothing)
Those that didn't opt out will of been paying to get a bigger state pension pot for nothing due to 2017 capping as you only have to earn your £144 a week entitlement, which I will do even though I opted out.
Here is the quote form the article I read...
Big winners are those who contracted out into a personal pension, even though we have been told for the last decade that this was the wrong thing to do. They get to keep their pots – which could be worth as much as £100,000 – and can still build up their state pension from £107.45 to £144 at the rate of £4.11 a year. Anyone in this group with at least 10 years to state pension age when the new rules take effect in 2017 will be able to get the same state pension as someone who remained contracted in, and will get to keep their contracted-out pot as well. It’s maybe not what ministers wanted, but it’s just one of the many consequences of unravelling 35 years of complexity in the state pension system
(the above may be flawed thinking, but I read about this online and will confirm tomorrow with my pension company)
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