Hi,

I am self-employed, 39 and today I got a letter from my pension company - Equitable Life - suggesting that I opt back into with regards to NI as opposed to my current state of being contracted out.

Does anyone have any views on this? The way that I am looking at general retirement at the moment regarding pensions, NI, etc, is that, well, it is a
right mess with little if no safeguards as to what happens with your money.
My current plan being to save as much as possible to buy a house in the next
few years and then look at the whole retirement 'thing'.

Am I the only one who feels a mixture of confusion, anger, mistrust of both
Govt & Pension firms and resentment with regard to retirement planning? In my early 30s I quite happily paid into a pension each month only to see both
my Equitable and Standard LiFe pensions go South in 2000/01.

I had taken out an Equitable Life pension as, working in TV-Land at the time on short term contracts, getting your own pension was the only option to plan for retirement. At the time EVERY single financial article and report on pensions said that the Equitable was the best pension provider... so I took out an Equitable pension only to discover that it was a complete disaster.

When I became fully self-employed in the mid 90s every recommendation for self-employed people was to put money into Standard Life, which I did, only to discover that they were the company that kept most of their investments in dot.con shares LONG AFTER the dot.con makret had gone South.

So, in the Autumn of 2001 I stopped paying into my pensions and decided to save to buy a house and, just as I was about to buy a house, the market bubbled with houses I was looking at literally going up 60K in a 6 - 12 week period.

With regard to contracting IN or Out there seems to now be so much confusion and so many conflicting views. There is somethign seriously wrong with this country when people who wish to save towards their retirement do not feel confidence, and have little trust, that their savings will actually do them any good long-term.

Constructive comments would be welcome.

Don't worry. Pensions and just about everything else are linked to equities, and we know they've been through a rough few years (but have recovered a bit). The stock market will come good again, but it might take another few years before pensions are worth as much as you put in. As with anything cyclical, when we're at the bottom of the market people will complain and say "it's not worth anything" or "it's worth less than the money I've paid in", but that is exactly the time you should be buying, because when the wheel turns and they do become worth something, you'll want as much invested as possible to reap maximum benefits.

I don't know that much about contracting out of serps, other than when I started a pension about 5 years ago I was advised to contract out, so that's what I did. I think by far the most important thing is to make sure you are paying in enough to your pension on a regular basis, rather than worrying about the intricacies.

Due to the pensions mis-selling crisis most financial advsiors will not state whether it's better to contract in or out. From what I've found out if you earn >30K/Yr and are under 50yrs old then contract out otherwise stay in but the big big problem is will this still be the best move in 20-30 year time.
contract out = get the money and hope it grows fast.
contract in = rely on the SERPS (secondary pension) being of a reasonable amount. But remember Labour have already changed the rules on this to make lower earners get more out and there is only so big a pension pot.

I personally have kept contracted in but am considering contracting out due to fear that the means testing of pension means I'll lose out due to having another separate pension/savings.

It is generally agreed that the amount paid each year by the DWP into an approved personal pension in lieu of giving up your S2P (State Secone Pension) NOT your Basic State Pension for the year in question is too low - the figures were calculated in ther late 90'3 when interest, investment and mortality rates were very different than today. If you contract out, you can take benefits from 60 onwards. From April 2006, you can add that up to 25% of your pot can be taken as tax free cash. S2P is paid from 65 for people born after 1956 and there is no tax free cash. You pays your money and takes your choice; the life offices are just terrified of a mis-selling scandal in future. Self interest my boy rather than a nod and a wink!