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83 per cent choose to remain contracted out of S2P, says L&G

Early responses to Legal & General’s mailing to contracted out customers show that 83 per cent have chosen to remain contracted out of the State Second Pension.

Based on 3193 responses received as at 13 November, 2644 customers opted to stay contracted out.

The news comes as several firms such as Norwich Union continue their policy of mass contracting in customers that have failed to respond to correspondence presenting them with the options.

This move has been criticised by Legal & General pensions strategy director Adrian Boulding who says people contracted in without their knowledge may well have grounds for a misselling complaint if they lose out as a result.

But NU has defended its strategy, arguing it has done everything possible to make customers aware of the options.

Legal & General, meanwhile, is issuing the same message to customers for the 2006/2007 tax year is the same as last year.

If customers wish to maximise the pension they can expect to receive at State Pension Age it says they are more likely to achieve this by contracting back into the State Second Pension.

But remaining contracted out gives customers more flexibility as a personal pension gives them the option to take benefits, including tax free cash, prior to State Pension Age.

Boulding says:

“While it is still early days, on the basis that those who reply quickly usually have the strongest views, the results vindicate our stance on the importance of giving customers a choice regarding their contracting out decision.”

Boulding adds: “We have placed a great deal of emphasis on communication with this year’s mailing to customers which, as well as a personal letter, has included a full Question and Answer leaflet and a link to a podcast ( to help pension customers make their contracting out decision for the 2006/2007 tax year.”


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