Pru advises on second state pension

Fri, 16 Dec 2005

The Prudential is advising many of its pension customers to opt back into the second state pension.

Around 440,000 of the insurance company's customers will be receiving letters next week, providing them with advice.

Government contributions to those who have opted out of the second state pension do not go far enough to counterbalance the risk, according to the Pru.

It is the first time that the Pru has given pension advice to all its customers who chose to opt out of the state pension, the BBC writes.

Tom Boardman, director of policy development at the Pru, told the BBC: "It is important that individuals are incentivised for the risks being taken by opting out of the second state pension.

"Our view is that the rebate levels for the 2005-06 and 2006-07 tax years will not provide sufficient incentive for the majority of our customers to remain contracted out."

Changes to the pension regulations by the Conservatives in 1988 made it possible for some to opt out of the second state pension.

These alterations to how pensions work were intended to mean that Britons would be better off in the long run if they relied on their own pension savings.


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