Norwich Union announced its support of the idea that people who have been "contracted out" of the state second pension should go back in.
This follows the news that it is to return 40,000 of its pension policyholders to the top-up state pension.
The news is unlikely to please the new work and pensions secretary, David Blunkett who wants to see people using their own initiate to save for retirement rather than relying on the possibility of a state pension.
But other insurers have made similar moves after new research from Which? came to light.
The research showed that people would be worse off in retirement as a result of opting out of the state earnings-related pension scheme (Serps) and taking up the offer of government payments into their own private pensions instead.
From the late 1980s the Conservative government wanted people to contract out of Serps and set up their own pension plan.
The plan has been that those who chose to contract out through a personal pension would receive government rebates on some of their national insurance contributions, which would be paid directly into the pension plan.
However, Which? believes some contracted-out personal pension holders will end up with less than half what they would have received with Serps.
The 40,000 Norwich Union workers who have been contracted out will now have their pensions automatically switched back to the state second pension, unless they tell the company they wish to remain contracted out.
Norwich Union workers back to state pension
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Norwich Union workers back to state pension
Mon, 23 May 2005
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