PENSION CHANGES COMING ON 6TH OF APRIL

The State Pension consists of two parts. There is the Basic State Pension which everyone is entitled to, whether they are employed or self-employed. The other part is only for those who are employed on a PAYE basis. It is now called the State 2nd Pension but used to be called SERPS (the State Earnings Related Pension Scheme). When you hit State Retirement Age, any entitlement you have built up with the State 2nd Pension is added to your Basic State Pension. In 1988 the Government gave people who were employed an option. Instead of building up an extra entitlement to the State 2nd Pension/SERPS, each year the Government would pay an amount annually into their personal pension plan. This was called “Contracting Out”- by which was meant that people chose to contract out of the State 2nd Pension year by year. Many people did “Contract Out”. The monies that the Government paid out to these people went into their personal pension and were called “Protected Rights” as some strings were attached to those monies. The Government has now changed their mind and, as of 6 April 2012, people no longer have the choice to “contract out”. The monies that have been paid into their pensions will remain there and all strings are being removed so that those monies are no longer referred to as “Protected Rights” and they will be treated like any other money in a pension. If you have any questions on this, please feel free to ring. Remember that this only ever affected those who were employed, as the self-employed were never part of this.