Even though contracting out on a defined benefit basis has been abolished, the requirements related to the contracted out benefits continue. From 6 April to 5 April , if a defined benefit occupational pension scheme wanted to contract out, it had to meet a test of overall scheme quality - this was the reference scheme test. The scheme had to provide a pension which was broadly equivalent to, or better than, the pension which would be provided under the reference scheme.
This is a registered money purchase occupational pension scheme that was authorised by HMRC for use as a vehicle for employees to be contracted out of the additional State Pension. As COMPs were classed as occupational pension schemes, they were established by an employer for the benefit of their employees.
When an employee joined a COMP scheme, they were automatically treated as being in contracted out employment. This meant that, as well as offering all the normal capabilities of a money purchase occupational pension scheme, it was able to be used:. If someone was contracted out using a contracted out money purchase scheme, some of the NI savings made by them and their employer were invested in their pension.
Those NI rebates formed the person's protected rights account within their pension fund. In addition to the usual HMRC rules on what benefits could be provided by registered pension schemes, there were special DWP rules setting out the benefits that had to be provided from the protected rights fund when an annuity was bought or on the member's death.
When contracting out under COMPs and APPs was abolished from 6 April , the special rules for protected rights were removed and these rights became ordinary benefits. Some money purchase occupational pension schemes were contracted out on a salary related basis.
These schemes, which were relatively rare, were known as contracted out mixed benefit schemes COMBs. But contracting out on a salary related defined benefit basis was abolished on 6 April to tie in with the introduction of the New State Pension.
An 'appropriate' personal pension was one that was authorised by HMRC for use as a vehicle for employees to contract out of the additional State Pension. However, from 6 April , contracting out for defined contribution schemes was abolished, and so members of an APP were automatically contracted back in at that point, with the scheme ceasing to be 'appropriate'. The contracted out monies that the APP held were known as protected rights.
The funds generated from personal or employer contributions are known as 'ordinary benefits', 'excess benefits' or non-protected rights. When a personal pension had appropriate status it meant that, as well as offering all the normal capabilities of a personal pension scheme, it could be used:.
If someone was contracted out through a COSR both they and their employer paid a reduced rate of Nl contributions on earnings between the earnings thresholds and the upper accrual point. This was known as the contracted out rebate; a flat rate reduction in the amount of NI paid.
Since 6 April , the reduction in NI contributions had been 1. Comments or queries about the Blue Badge scheme can be emailed to bluebadges infrastructure-ni. For queries or advice about claiming compensation due to a road problem, contact DFI Roads claim unit. For queries about your identity check, email nida nidirect. For queries or advice about criminal record checks, email ani accessni. For queries or advice about employment rights, contact the Labour Relations Agency.
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If you wish to check on a problem or fault you have already reported, contact DfI Roads. You must have JavaScript enabled to use this form. Enter a valid email address. This feedback form is for issues with the nidirect website only. From 6 April there is now a single flat rate pension for everyone. Although to get the full amount you would have to pay the full national insurance amount for some time.
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