What about contracting out?

Millions of people were given the chance to opt out of Serps from the 1980s onwards, a process known as contracting out. If you took advantage of the freedom then the National Insurance contributions which would otherwise have been earmarked for Serps were paid into your personal pension instead.



The idea was that this money could grow faster and therefore produce a bigger pension in the private sector than it could if it was left in Serps. High charges and low growth often put paid to this and millions of people found that contracting out had been an expensive mistake. It is still possible to opt out of S2P but few independent experts say it is worth it. Take a look at the guide, Contracted-Out Pensions – Your Guide at www.thepensionservice.gov.uk for more information. The Financial Services Authority ( www.fsa.gov.uk ) and the Association of British Insurers (www.abi.org.uk) also have plenty of free information on contracting out.