This is the process of electing to have National Insurance contributions, which would have been credited to S2P, redirected into a Personal Pension Plan.
Your pension scheme can provide you with benefits which replace the State Earnings-Related Pension Scheme (SERPS). In this case, part of your and your employer's National Insurance Contributions will be paid into your pension scheme. This is called contracting out of SERPS.
You can opt out or 'contract out' of (leave) the State Second Pension. Although you and your employer continue to pay the higher rate of National Insurance contributions, the state will pay an age-related rebate (refund) into a separate pension pot for you. [ Back to A to Z list