The FSA has issued guidance on their website alerting people to reassess their current status of being either contracted in or out of the Second State Pension, in anticipation of the end of the tax year.
The FSA says consumers who are currently contracted out of the State Second Pension, either through a stakeholder or personal pension, have a yearly option to change their status, and should seek guidance on whether to maintain or alter this status.
People earning below £79 per week are automatically included in the State Second Pension, unless they decide otherwise, but many people choose to ‘contract out,’ and instead contribute towards private schemes, such as a stakeholder pension.
The FSA cautions it is imperative for people to review their decisions to contract out before the end of 5 April, as scenarios can change yearly rendering an earlier decision to contract out invalid.
The Association of British Insurers in conjunction with the Association of Independent Financial Advisers have also created a fact sheet entitled: Contracting out: it's your choice to aid people in making the most suitable decision.IFAonline
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