PENSIONS - THE END OF CONTRACTING OUT

For many years people who were employed had the option to take an annual payment into their pension instead of notching up qualifying years in what was called SERPS (State Earning Related Pension Scheme) and is now called the State Second Pension. This payment represented a return of some of their National Insurance contributions for the year in question, so it was not a gift from the Government. From the 6th of April 2012 the Government is ending this option. From that date forward the only option for the employed will be to build up entitlement year by year for the State Second Pension. The self-employed never had this option. The self-employed and employer alike are entitled to the full Basic State Pension if they pay the required number of years of National Contributions. The Basic State Pension has nothing to do with Contracting Out.