Since 6 April 1978, members of the Local Government Pension Scheme (LGPS) have been paying a reduced rate of National Insurance contributions (NICs) by virtue of being contracted out of the State Earnings Related Pension Scheme (SERPS), known more recently as the State Second Pension (S2P).
This means that instead of paying full NICs and getting both the basic State Pension and the Second State Pension, LGPS members pay a reduced rate but only get the basic State Pension.
However, the Government changed the way State Pensions were earned from 6 April 2016. There’s now a single flat rate pension for everyone. Although to get the full amount, you would have to pay the full NICs amount for some time. For more details, visit www.gov.uk/state-pension/overview.
As a result of this change the Government ended the option for pension schemes to be contracted out of the State Pension scheme. From 6 April 2016, members of the LGPS will pay the full rate of NICs.
It’s important that you understand how much State Pension you could receive and when you might receive it.