Contracting-out to be abolished in 2012

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Contracting-out of the state second pension is to be abolished from 6 April 2012, the Government has confirmed.

Standard Life says the change should remove some of the differences between protected rights and other pension savings, with benefits for consumers. The 2011/12 tax year will be the last opportunity for people in defined contribution schemes to contract-out of the state second, and those using personal or stakeholder schemes will receive no further National Insurance (NI) rebates after April 2012. Defined benefit scheme members who have contracted-out will not be affected. Andrew Tully, pensions policy manager at Standard Life, says the change should result in further harmonisation...

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