As a professional, it`s important to understand the significance of choosing the right keywords when writing an article. In this article, we`ll focus on the question of “when did contracting out end for personal pensions.”
For many years, contracting out was a popular way for individuals to save for their retirement. Essentially, it involved opting out of the State Second Pension (S2P) and instead paying into a personal or workplace pension scheme. In return, individuals would receive a lower National Insurance contribution rate, which would be redirected into their pension.
However, as part of the government`s plan to simplify the pension system, contracting out was gradually phased out. The process began in April 2016, when employers were no longer able to contract out on behalf of their employees.
Then, in October 2018, individuals were no longer able to contract out of the Additional State Pension (ASP). This meant that anyone who had been contracted out previously would be automatically brought back into the ASP, and would receive a higher state pension in return.
It`s worth noting that contracting out still exists in some forms. For example, it`s possible for individuals to contract out of the new State Pension (which replaced the S2P) if they have a defined benefit or final salary pension scheme. However, this is a relatively niche area and doesn`t apply to most people.
In summary, contracting out ended for personal pensions in October 2018. While it may still be possible to contract out in certain circumstances, the option is no longer widely available and most people will be automatically enrolled in the state pension scheme. It`s important for individuals to understand the implications of these changes and to plan accordingly for their retirement.