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Serps (State Earnings Related Pension Scheme)
or State Pension 2 as it is now called is
an extra top up pension that is dependent
on your National Insurance Contributions.
There is much debate over whether you should
contract in or out of SP2.
There is no financial advantage for contracting
out and if your decision were to be based
purely on monetary terms then you should
contract back into SERPS/SP2. However, there
are subjective a personal reasons why you
may wish to remain contracted out:
You do not trust the Government and would
prefer to have the money under your own
control despite the risk that you will probably
have less pension at retirement.
If you die before retirement the contracted
out money would go to your spouse / estate.
You can take the benefits at 60 rather than
65. From 2006 you may be able to tale them
from 55 though this fact is not certain
and is subject to the final ratification
of the new Pensions Act.
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