Second State Pension - In or out
Sun, 31/01/2010 - 10:27
Hi,
I am currently 32 and a high rate tax payer, for the past 8 or 9 years I have been contracted out of the Second State Pension. I currently have a stakeholder pension scheme with my employer also contributing towards it.
I have recently been made aware of the changes in April 2012 (date still to be confirmed) where by under my plan, I will no longer be able to sign out of SERPS/S2P. As part of this, if you earn over £40k in 2009/10 your rebate for that year will be up to 10% lower than previous years, and in 2010/11 and 11/12 if you earn over £31k, the rebate will be a further 10% lower.
I have received a letter from my provider which advises “<providers name> suggests the amount that the government now pays into your pension plan offers a realistic prospect of providing a pension of the same level as you are giving up by contracting out of the State Second Pension.”
Based upon the above statement, I am not wonder whether its best to contract back it, or whether to stay contracted out for the remaining 3 years. I am unable to find any formula’s which show how the State Second Pension is calculated, and obviously there is no guarantee on the performance of my current “pot”, although at least with that I have the flexibility to choose my own funds.
Does anyone have any advice or comments on this?
Many thanks
Rob
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