Any pensions experts? Contracted in/out of SERPS, I think I understand.....

[Orinoco]

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if you contract out you pay a lower NI, but an amount goes to your personal scheme. What they are saying is that the resturns on the NI amount in the personal scheme are unlikely to be as good as the returns from the 2nd state pension.

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but presumably your final salary scheme is independant of SERPS?
And you don't opt on on your pension - you opt out in your earnings ( I think).
Am NOT a pensions expert.

If you have a final salary scheme what would you gain from transferring the old scheme in? Or would it be kept in a separate pot (like a AVC?) - in which case relarive merits of transferring are probably cost related.

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All final salary schemes are contracted-out as they are considered to be good schemes. If you are in a final salary scheme, you have to contract out of SERPS. Your employer has no choice but to use the lower rate for NI as there is a legal statute that says this is corect for final salary schemes. If your employer took the higher (contracted in) amount, it would be discovered by HMRC who would, no doubt, end up fining your employer.
If you are in the Local Government Scheme, you should be fine as it is still index-linked final salary scheme. However, the government is trying to change this, so you need to keep an eye on the news and consult your union rep.
You cannot pay higher NI, but you could put extra money in to an AVC. Speak to an IFA if you're worried.

I had that in the back of my mind somersetmum. Do you actually pay less NI though - I thought that you had the sameamount deducted just the HMRC send a percentage onto your scheme?

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Orinoco - Pru have contacted to contract back in however they havent realised you are no longer contributing to that scheme anyway. It is a legal requirement they contact you - you are contracted out in the FS scheme and the other person is right the FS scheme has index linking for the GMP side of things that aims to be at least equivalent to the serps benefit you would get at retirement -( god its all coming back to me!) Dont worry about the pru thing - also you may actually find that you could transfer your old pru pension into the new LGschem in the form aoof AVC contact the LGS provider - payroll initially to ask them about this - they are likely to ask youfor an up to date statement from the pru of fund value and GMP element ino order to do the calculations. ( you can allways see and Independent Financial adviser - you need one qualied to Advanced Financial Planning G60 pensions standard) Your personal pension with the pru is whats termed as Paid up - ie no firther contributions are being paid into it at the moment including the NI element.