What happened in a contracted-out pension scheme?

A contracted-out pension scheme was contracted out of the additional State Pension (the State Second Pension or S2P, formerly known as SERPS). This meant that scheme members weren’t qualifying for additional benefits from the State Pension.

Both the scheme member and the employer paid a lower rate of National Insurance contributions. Contracting out for salary related schemes ended in April 2016. Contracting out on a 'money purchase' basis ended in April 2012.

Note: This content is provided as general background information and should not be taken as legal advice or financial advice for your particular situation. Make sure to get individual advice on your case from your union, a source on our free help page or an independent financial advisor before taking any action.

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