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Serps: Contracting-Out Terms

Volume 589: debated on Monday 11 May 1998

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asked Her Majesty's Government:What sized pension would accrue to those who contract out of SERPS for the rest of their working life and invest the rebate in an appropriate personal pension at the ages of 25, 35 and 45 respectively. [HL1540]

Based on the assumptions used by the Government Actuary in his Review of Certain Contracting-Out Terms (Cm 3888), an individual investing only the National Insurance contribution rebate in an appropriate personal pension (APP) would receive a pension broadly equivalent to that which they would get from the State Earnings Related Pension Scheme (SERPS). In practical terms, the amount of pension will depend on actual investment performance. If the rate of return was higher than that assumed by Government Actuary's Department, it would produce a higher pension.