Which? is calling on the government to issue immediate advice for those who contracted out of the second state pension following damning new research by the Financial Services Authority.
The watchdog has found that people who will be contracted out in 2005 and 2006 are likely to lose up to 800 a year, with those aged over 50 being worst hit.
The new figures underline concerns we highlighted last week; we revealed that about 4.5 million people who contracted out of the state second pension (formerly Serps) into a personal pension look likely to get less than if they’d stayed in the scheme.
Which? Head of Campaigns Louise Hanson said:”This new research is certainly cause for alarm for those who have contracted out. The government has given 35 billion of tax payers’ money to the finance industry in the hope of boosting pensions, but the reality is millions of people are likely to lose out when they retire. People still have the option of contracting back in but they need immediate advice from the government.”
Which? has produced an advice sheet . It explains how to check whether you’ve lost out, and what to consider when deciding whether to stay contracted out or contract back in.