1. Home
  2. UK Finance Discussions
  3. Pension Law

Pension Law

My husband (aged 44) is about to be made redundant and has a final salary pension, which the company (but not he) has contributed to for 17 years. This pension will be frozen when he leaves. Ideally we would like to leave the pension where it is, but have been scared witless by tales of pension scheme closures and the like, and are seriously concerned for the future of the company he is leaving (eg my husband thinks it is likely to go under within the next 4 to 5 years). I have been told that there are changes afoot to make private pensions safer, which are likely to come into effect in 2005. Can anybody tell me please what these changes are?

Secondly, could anyone please tell me where he stands with being contracted out of SERPS? I didn't think you could contract back in, so when he gets another job will he still be paying the lower NI contribution or will he have to pay the full contribution even though he cannot go back into SERPS? ( I am assuming here that for the first couple of years he won't be in a pension scheme as most employers have a qualifying period before new employees can join).

Thirdly, he has another frozen pension from when he left Land Rover over 20 years ago (which was a contributory scheme), which then went through a period of being in the hands of Rover Group, and which has now ended up being owned and administrated by the BMW (UK) Pensions Services Ltd. The GMP part of the pension is guaranteed to rise at 8.5% per year until he retires - has anyone any thoughts on the safety of this scheme and whether

8.5% is a healthy figure?

Any other pension info that anyone feels I should know would be gratefully received - My husband mind just goes blank and turns to mush when the word 'pensions' is uttered and I find pensions confusing to say the least, and usually end up feeling irritated and annoyed by the laxity and red tape that surrounds them..........after all if I gave anybody other than a pension scheme my money to handle, they wouldn't have the carte blanche to do what the hell they like with it - even losing it compleyely - as a pension scheme seems to have!

Thanks for reading and many thanks if you feel able to offer any thoughts/advice.......one last thing - we are very financially challenged at the moment, a fact which redundancy is likely to make worse, so paying to see an independant IFA is going to be impossible in the near future, so that avenue of help is currently useless right now.

Lina

Reply to
LJ
Loading thread data ...

I haven't read much other than from 2005 the pension fund will be required to purchase some sort of insurance that will compensate members if the fund goes bust.

Sounds like everyone else will be funding the failures with lower contributions going into their pension fund.

Having said that i'm glad my pension will be guaranteed (hoping it will remain until 2005), i have much sympathy for those who have lost.

formatting link

Reply to
Jane Tweedynn

I have been told that there are changes

See Jane's reply previous.

As soon as he leaves the scheme (or at least from 6th April following) he will automatically be back in SERPS (or Second State Pension as it's now called -S2P). He can then contract out via a personal pension if he wishes. Either way he will pay the full NI rate.

Dunno. I don't know how you can tell these days! If you want safety then you need to take the transfer value from the main scheme and put it into a personal pension in some fund which cannot go down, such as a cash fund. Unfortunately, if you want safety like this then you will be giving up much chance of growth, and growth is what you need to look for. This is not advice to do so, just showing you an option. Unfortunately, if you want advice in this very complicated and contentious area you are going to have to consult an IFA, and one who specialises in this.

Rob Graham

Reply to
Rob Graham

The job itself is either contracted in or contracted out. If he joins a new job which is contracted in, he will start paying the higher rate again.

Reply to
Ronald Raygun

"Ronald Raygun" wrote

Not quite, but close - it is actually the *scheme* that is contracted-out (or not). A subtle difference!

Eg1 Employer has a contracted-out scheme, and employee joins it - (s)he pays lower NI; Eg2 Employer has a contracted-out scheme, and employee does *not* join it - (s)he pays higher NI.

Eg3 Employer has two schemes, one contracted-out and the other not (ie other is "contracted-in"); Eg3a Employee joins the contracted-out scheme - (s)he pays lower NI; Eg3b Employee joins the other scheme - (s)he pays higher NI.

[Note that a scheme doesn't/can't effectively "contract-in" -- they would just *not* contract-out -- hence I try not to use the term "contract-in"...]
Reply to
Tim

I should have said the above plus 'assuming he doesn't join a contracted-out scheme with that new employer'.

Rob Graham

Reply to
Rob Graham

BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.