Contracting out rebates for the five years beginning in 2007 will see a severe decrease for those aged 43 and over who contract out of the state second pension (S2P) into a personal pension.
The rebates announced by the Department of Work and Pensions (DWP) follow the publication of the Government Actuary’s report which sees the age-related rebate cap in defined contribution (DC) personal pensions fall from 10.5% to 7.4% in April 2007. At the moment, the age-related cap affects people aged 54 or over, at which point their rebate is limited to 10.5%, and this is less than the actuarial value of the pension given up by contracting-out. But the reduction in the ceiling announced by the government means from 2007, people aged 43 or over who have contracted-out will be limited t...
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