All occupational and stakeholder pension schemes must be contracted out of SERPS, but members have t...
All occupational and stakeholder pension schemes must be contracted out of SERPS, but members have the right to decide whether or not they take that option, an adviser for the Department of Work and Pensions has confirmed.
Confusion was created in the industry last month when the NAPF published a newsletter stating schemes must contract out, however it was not clear at the time whether this meant members could remain contracted in.
Following IFAonline's story published on Tuesday, Steve Croft, policy expert at the DWP says schemes must contract out if they want to transfer in protected rights policies and gain the relevant tax breaks, however, most schemes already choose to contract out.
Croft adds that while people were developing literature over the last few years, legislation and policy was still being writtenfor the 1999 Pensions Act, which is why confusion was created and information was misinterpreted.
Legal counsel was sought by the government, says Croft, in order to clarify their position
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