Financial Adviser Attempts To Recover 100 Billion Pounds For UK Clients
If you have commenced a UK pension scheme since 1985, and contributed very little or stopped contributing, you may have more than you think in your personal pension or company pension than you think.
It has come to light that many financial advisers would have contracted people out of the UK second state pension (previously known as SERPS). As such National Insurance contributions would have continued to be paid into these pension schemes.
It is recommended by the UK Financial Services Authority, that any individual who feels they may fall into this category. i.e. anyone between the age of 35 and 50, that has commenced and maybe cancelled a private or company pension scheme during their working life, that they contact an independent financial advisers to research the pension and discuss their options.
By contacting a financial adviser and discussing your options you will ensure you are getting the most out of your larger than expected pension fund (if applicable). It may also be necessary to contract back into the second state pension.
What is a second state pension?
Nearly everyone in the UK can expect to get a basic state pension once they reach the state pension age at that moment. However you are also eligible to a second state pension if you are employed and paying National Insurance Contributions during your working life. Come state retirement age you will receive additional second state pension. Up until April 2002, the second state pension was referred to as the State Earnings Related Pension Scheme (SERPS).
If you have contracted out of the Second State pension into a personal pension or stakeholder pension you will need to decide whether this is the correct action for you. Your decision will be based on your attitude to risk, as well as your personal circumstances.
It is important for each individual to know the risks and disadvantages of being either contracted in or out of the second state pension.
By staying contracted out of SERPS you are running the risk that your pension income could be lower than that available by receiving benefits from the second state pension.
To summarise, there are thousands of people in the UK who have contributed to pensions, and are contracted out of receiving second state pension benefits. They are unaware that they will not be entitled to the second state pension, but they are also unaware of the current value of their pension fund due to National Insurance contributions being paid into a pension scheme they have forgotten about from years previous.
In order to find out whether it is more suitable for you be contracted in or out of the Second State Pension the Financial Services Authority recommends that you seek Independent Financial Advice. If you continue to be contracted out of the Second State pension it is also recommended that you review the pension funds that your National Insurance contributions are being invested in in order to suit your risk profile and maximise growth.
Gareth Flanagan is an independent
financial adviser with Principle First Financial Services one of
the UK’s few firms of Chartered
Financial Planners. To discuss your options, please visit Principle
First at http://www.principlefirst.co.uk
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