Members of the local government, fire or police pension scheme were automatically contracted-out of the State Earnings Related Pension Scheme (SERPS) when this was introduced on 6 April 1978 and from the State Second Pension (S2P) when this followed on from SERPS.

Contracting-out for salary related pension schemes will cease after 5 April 2016 as a result of the Pensions Act 2014 and the introduction of the new State Pension.

It is understood that, in the same way that a member of the Local Government, Fire fighters’ and Police pension schemes who was contracted-out of SERPS/S2P would not build up the SERPS/S2P ‘Additional Pension’ element of their old state pension whilst contracted-out, there will be an adjustment made to their new State Pension in respect of such contracted-out periods.

Please be aware that the LGSS Pensions Service are not able to advise on the potential effects of such an adjustment since this will be applied by the Department for Work and Pensions. There is an overview of the new State Pension here https://www.gov.uk/new-state-pension/overview and a State Pension calculator here https://www.gov.uk/calculate-state-pension

From 6 April 2016 when active members of the local government, fire and police pension schemes will no longer be contracted-out, both their and their employers national insurance contributions will increase as the contracted-out rebates will no longer apply. Whilst the Pensions Act 2014 allows pension schemes to increase employee pension contributions or to reduce future benefit accrual, to cover the additional cost of the abolition of contracting-out, these are not options that are open to any of the public service pension schemes such as the local government, fire and police pension schemes.