NAPF Comment on Contracting out Rebate | PLSA
NAPF Comment on Contracting out Rebate

NAPF Comment on Contracting out Rebate

03 February 2011

The Government announced today that it would cut the contracted-out rebate for defined benefit (‘final salary’) pension schemes for 2012 to 2017 from 5.3% to 4.8%.

Joanne Segars, Chief Executive of the National Association of Pension Funds (NAPF), said:

“This is a stealth tax on people saving into a pension, and a further squeeze on the employers trying to help them.

“Cutting the value of the rebate will raise the operating costs of final salary schemes, and is likely to spur more employers to close these pensions to staff.

“The government should be supporting workplace pension schemes, not saddling them with extra costs.”

Those who contract out of the state second pension pay reduced-rate national insurance contributions (NICs). Employers providing contracted-out pension schemes pay a lower rate of NICs for those employees who join their schemes. To create the new 4.8% rate, employer rebates are falling from 3.7% to 3.4% and employee rebates from 1.6% to 1.4%.

Notes to editors:

1. The NAPF is the leading voice of workplace pensions in the UK. We speak for 1,200 pension schemes with some 15 million members and assets of around £800 billion. NAPF members also include over 400 businesses providing essential services to the pensions sector.


Paul Platt, Head of Media and PR, NAPF, 020 7601 1717 or 07917 506 683. [email protected]

Christian Zarro, Press Officer, NAPF, 020 7601 1718 or 07825 171 446 [email protected]

Navigate to ...