28 November 2007
Legal & General is writing to 115,000 of its contracted-out
personal pension scheme members warning that they could get a "raw
deal" if they do not opt back into the State Second Pension
Instead of building up pension rights from the State, based on a
slice of earnings, people who are contracted-out forego S2P and
have National Insurance Contribution rebates/incentives paid into
their personal pension instead.
The Government has cut the maximum National Insurance rebate to
7.4% of earnings, down from 10.5% last year. According to Legal
& General, this reduction means that savers over the age of 44
won't get enough National Insurance Contributions to compensate for
the pension benefits they are giving up under the State.