Pension conundrum

By THIS IS MONEY
Updated:

 

LINCOLN, in which I have a frozen personal pension, suggests I might be better to opt back into Serps. At present I contribute to another pension. I'm self-employed but have a small earnings tax exemption certificate and I don't think I'm paying any NI contributions. I might be returning to work within the next few months. What action should I take? SD, Worcester

Patrick Connolly, at independent financial advisors John

Scott & Partners, says: The State Earnings Related Scheme (Serps) has now been replaced by the State Second Pension (S2P). The decision whether to opt in or out of this pension largely depends on your employment situation, salary, age and attitude to risk.

But you do not need to worry about this because payments into S2P are taken from class 1 National Insurance contributions. These are only paid by people who are employed, not self-employed people such as yourself.

Your existing funds with Lincoln cannot be moved into the state scheme.

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