Pension payments from the government

[Pootle]

Somebody recently told me that it is possible to have the money that is paid out of your monthly salary to the government for pension, paid directly into your personal pension plan on annual basis. Is this indeed true, how much is it and is this worth financially considering? Thanks in advance.

[Ethel]

Do you mean 'contracting out'? If so, part of your NI contributions go to a private pension, and you end up with a smaller state pension. You still pay NI towards your pension and you still get the basic pension when you retire, but you do pay less NI. You don't get the State Second Pension that people who have not contracted out will get. This used to called SERPS.

Who knows how a private pension will fare? You could end up much better off, or much worse off.

Read here:
http://www.pensionsadvisoryservice.org.uk/Pens ion_Rights/Contracting_Out/

[Captain Spod]

Most pension companies and advisers now recommend that people do not contract out of the State scheme as personal pensions do not carry a guarantee. The question remains, of course, how reliable is a government guarantee?