Last month, the Minister for Pensions and the Ageing Society, Angela Eagle, announced that contracting-out for defined contribution (money purchase) schemes, as provided for in the Pensions Act 2007, is to be abolished from 6 April 2012. From that date, individuals who are contracted-out via a defined contribution scheme will automatically be brought back into the additional state pension. Members contracted-out on a defined benefit basis are unaffected.

The DWP has published a fact sheet for employers, which clarifies that, from 6 April 2012, the special rules governing the treatment of protected rights will be removed and protected rights will then be able to be treated in the same way as other benefits. There will then be no further need for administrators to track protected rights accrual separately.

View the DWP’s fact sheet. (pdf 26.99kb)