Protected Rights
Click here to find out about the changes to SIPP regulations.
What are Protected Rights?
Protected Rights are pension funds built up with contributions paid by the Government when an employee ‘contracts out’ of (i.e. decides not to participate in) the , or its predecessor the State Earnings-Related Pension Scheme (SERPS), into a (or ‘defined contribution’) pension scheme. You may also have heard these contributions referred to as National Insurance ‘rebates’.
The option to contract out through a was first introduced in 1988 and is expected to end in 2012. Only employed people can build up Protected Rights, whereas the is available to both the employed and the self-employed.
New Pensions Rights regulations introduced in October 2008 have provided much greater freedom for Protected Rights funds, including allowing them to be moved into SIPPs .
More on contracting out
If you are contracted out, the government will:
For an individual pension plan - pay some of your National Insurance contributions (called a rebate) and income tax relief into the pension scheme to which you belong. This money is invested to provide benefits at retirement via your pension plan, instead of the benefits you would have received from S2P had you remained in the state scheme.
For a company pension scheme - reduce your National Insurance contribution rate, so the benefits you get from your scheme at retirement will exceed those that have been forfeited from the S2P.
Find out more about:
Not sure if you have ever contracted out of S2P or SERPS?
To find out if you have received any protected rights contributions, call the HM Revenue & Customs contracted out pension helpline on 0845 915 0150*.
You will need to have your National Insurance number to hand when you call. How can I find out if I have other pensions I could transfer into a SIPP? The Pension Tracing Service can help you locate pensions that you may have forgotten about. They can be contacted on 0845 6002 537* or online.
Alternatively you can write to them at:
Pension Tracing Service,
The Pension Service,
Tyneview Park,
Whitley Road,
Newcastle upon Tyne
NE98 1BA.
 Retirement planning |
