Customers choose to remain contracted out

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

Adrian Boulding, Legal & General’s Pensions Strategy Director, said: “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.”

Legal & General’s 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, then we suggest they are more likely to achieve this by contracting back into the State Second Pension.

However, remaining contracted out gives them more flexibility. Their personal pension gives them the option to take benefits, including tax free cash, prior to State Pension Age. If they value this flexibility then they may wish to remain contracted out, as the State Second Pension does not allow benefits to be drawn earlier than State Pension Age.

Adrian continued, “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 (www.legalandgeneral.com/podcast) to help pension customers make their contracting out decision for the 2006/2007 tax year.”