In 1988, I gave myself the advice to opt out of Serps and used an NPI personal pension to do this. I am now 61 and have decided to make use of the fund available which is just short of £40,000.
Under current legislation, I can get get a quarter of this, very nearly £10,000 in tax-free cash and use the remaining fund to set up an annuity.
Legal & General has offered me a non-escalating single life (I am not married) benefit of £1,856.76 a year after I pocket the tax-free cash. Divided out over 52 weeks, this comes to about £35.70.
The last state pension forecast I received indicated a contracted-out deduction of £30.28 a week. I realise that this would be indexed (hopefully) and would have incorporated a widow’s pension (not relevant to me) but it is still £5 a week less than my L&G benefit, would not give me £10,000 in cash and would need me to wait another four years before I get anything at all.
Did I give myself good advice in 1988 or not? I will leave you to decide.
Barbican Independent Financial Advisors,