State second pension (S2P)
Should you opt back in?
People who are contracted out of the state second pension (S2P) may benefit from opting back in if they are aged 44 years or older to avoid missing out on rebates, according to Legal & General.
The S2P is an earnings-related benefit paid on top of the basic state pension. Anyone can opt out of the S2P by purchasing an 'Appropriate Personal Pension' from their life insurance provider. Both men and women who opt out beyond the age of 44 years will find their rebate may not grow enough before retirement to replace the benefits they might have had if they stayed in the S2P.
If you are aged 44 or over, your rebate is less than the value of the S2P that you are giving up. The older you are when you opt out, the more dramatic the reduction becomes. Professional advice should be taken to consider contracting back.
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Levels and bases of, and reliefs from, taxation are subject to change.
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