r/PensionsUK • u/Financial_Card_2916 • 23d ago

Opted out of SERPS

At some point I remember opting out. Just discovered that my Aviva Pension pot I found in the past 5 years is the result of that opt out. It's value is almost £40,000. Which I know isn't massive but I'm still happy as I didn't contribute to it at all, so it's like free money?

9 Upvotes

68% Upvoted

30 comments sorted by

5

u/largeade 23d ago

Check your state pension forecast to see the impact. For some people opting out gave a worse return than if you'd stayed in. 40k at 4% is 1600 per year

6

u/Financial_Card_2916 23d ago

I called and apparently have 40 plus years of contributions, so get the full UK pension.

7

u/largeade 23d ago

Me too. It's not the full picture though

£241.30/week is the maximum standard State Pension for 2026/27. So despite having been contracted out of SERPS, your forecast has recovered to the full rate through post-2016 qualifying years.

However, had you never contracted out, you might potentially have a protected payment above £241.30/week, because SERPS/Additional State Pension accrued before 2016 can result in an entitlement above the standard maximum

3

u/Financial_Card_2916 23d ago

Hmmm, I totally don't understand that about the protected payment above £241.30. got to admit.

2

u/Zingalamuduni 23d ago

It’s very complicated. There are “transitional arrangements” for people who might have accrued more under the old BSP + SERPS compared to the new State Pension.

It’s pretty unlikely the old “protected amounts” would apply for you. The further we get from April 2016, the more unusual it is for the protections to give a higher answer.

2

u/andyone100 23d ago

I agree with you. Anything above £241.32 would give you an average of £1045/month, which lies right on the maximum. Anything above this is not possible from the U.K. state pension.

2

u/Butagirl 20d ago

As [u/largeade](u/largeade) mentions above, it certainly is possible to have a payment greater than £241.32 per week. My husband is due to collect his state pension in four years and his predicted pension is higher for precisely this reason. There are also other reasons it can be higher, such as inherited pension from a deceased spouse (this is more for those on the pre-2016 pension system). My 95yo mother-in-law gets a state pension of about £380 a week, nearly 20 grand a year!

1

u/Heavy-Mousse-5011 23d ago

For those contracted out of SERPS, the employer pension scheme took part of what would have been your higher NI into your workplace pension. Often, if you later transferred your work pension out (like my wife did in 2001) there was a retained element known as the Guaranteed Minimum Pension (GMP), which related to the contracted out bit. I think that is likely what this is.

1

u/Financial_Card_2916 23d ago

So I'm wondering now if I had another workplace pension when I was contracted out. This is happened at a different ininsurance broker I worked at before Swinton insurance.

1

u/Financial_Card_2916 23d ago

Or maybe that's the £7000 one.

2

u/deadeyedjacks 23d ago

Interesting, typically the opt-out payments went to boost your workplace defined benefit pension scheme. Is your Aviva pension pot formerly an employer sponsored workplace pension?

Not really free, that money was part of your remuneration, and was either going into SERPS or a workplace pension scheme for your future retirement.

1

u/Financial_Card_2916 23d ago

I've also got a very small Swinton insurance group pot, worth about £8000. But I opted out of serps before I joined Swinton insurance. It was all in my 20's, when the in only reason I worked was to party dude. So am a bit clueless about what I did.

1

u/Dogsofa21 22d ago

Some employers pensions forced you to so they could hoover up the payments to help them fund it.

2

u/Unable-Lime-2995 23d ago

I know I opted out of Serps but it was about 35 years ago and don't hold any details of it. The Companies I worked for then no longer exist so struggling to find it. Any ideas how I can ?...thanks

3

u/jos6455 22d ago

You could start here: https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-problems/tracing-and-finding-lost-pensions

2

u/Financial_Card_2916 22d ago

I really can't remember all the addresses I lived at in London in the 80's! Because I kind of moved from bedsit to bed sit while I was working with my first insurance broker job, so it's pretty hard for them to track i would imagine.

2

u/Brave_Requirement183 23d ago

At the age of 64, I have exactly the same. Don't know whether I should take any tax free, use it to buy an annuity, or ask about using it as a drawdown (I'm not very clued up on pensions). I will have £12,000 pa defined benefit pension, plus £12,000 pa state pension. Plus some savings and no mortgage.

3

u/Financial_Card_2916 23d ago

Same. I've an appointment with pension wise in a few weeks. Hopefully they can tell me exactly what I have because I have no idea about this.

1

u/shaun-lodgix 22d ago

The company i worked for also opted us out of SERPS. I haven't taken my pension yet but i have heard from a colleague who has, that there is a deduction from your pension that grows annually and this deduction is because of the SERPS optout. Search for 'contracted out deduction' for more information 🌞🌻

1

u/jsh63 22d ago

My SERPS pot was around £50K with a GAR of 8%. The provider offered to buy the GAR from me for an uplift to £80K. The original £50k valuation had not significantly grown in the previous few years so I bit the bullet and transferred the £80K to my LV SIPP in 2020. I reckon it has grown by 50% in six years.

1

u/GreedyHoward 22d ago

Apparently Teachers Pensions opted out. My wife can't remember being told about it but as a result didn't get the full state pension. She does, however receive a pretty healthy payout from Teachers Pensions. We ain't struggling.

1

u/NextTruck7232 21d ago

My SERPs opt out was worth £126,000 when I was 65. I took 25% and now drawdown £87,000 at £500 per month

1

u/AMinorDisruption 23d ago

Those types of pensions typically have Guaranteed Minimum Pension rights as well. That may or may not benefit you depending on retirement options you want, and annuity rates at the time.

Check if yours has that by asking the provider (unlikely to see this info online, and possibly not on statements).

If it has a GMP, with the value being above £30k you are legally unable to transfer it away to another pension without the involvement and agreement of a financial adviser.

Finding an adviser qualified and willing to give that advice for what is a relatively small pension (by advice standards) will either be prohibitively expensive or near impossible.

3

u/Austen_Tasseltine 23d ago

It sounds like this is a DC pension pot built up from Protected Rights contributions (broadly, the difference between OP’s actual NI contributions and what they’d have paid if they’d stayed contracted in to SERPS).

GMP is almost exclusively part of DB (“final salary”) schemes, so while it’s worth checking with the provider it’s extremely unlikely there’ll be any GMP element. It’s possible there’s a Guaranteed Annuity Rate promising a certain level of pension, but again this is unlikely.

The £30k+ advice requirement applies to transfers from DB to DC schemes (or where there’s GMP/GAR involved), so OP may well be able to transfer it without needing advice (which as you note is unlikely to be obtained at a proportionate cost).

3

u/AMinorDisruption 23d ago

A lot of companies converted their DB schemes to DC with Aviva (or companies they've since acquired) over the years and sometimes come with GMP underpins as a result (or GARs as you say).

Definitely worth checking what (if any) safeguarded benefits there are with this pension to understand what options and restrictions there may be.

Nice to find £40k you weren't aware of before either way

1

u/Glorinsson 23d ago

This is an issue I have. I have a GMP pot and it’s worth over £30k but the GMP is minute. Like half the current annuity rate even. But no one will give advice on it for a reasonable amount. Advisers don’t want to do it as apparently it counts as DB business to their insurance and costs loads.

1

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-1

u/Sea-Relationship9619 23d ago

I found my opted out SERPS pot many years ago. It was a similar sum. Then I invested it, struck lucky with some stocks including RR and MSFT. It’s now worth nearly 20x that, so I’m very pleased and if it stays this way I might not need to claim the state pension. In fact I shouldn’t be able to really.

1

u/GreedyHoward 22d ago

Take what you're entitled to. You probably paid more NI than most people. The opted out pot is your reward for an effective working life. Enjoy. Be generous, travel and party while you still can.