Considerations where member ceased to be in DB contracted-out employment before 6 April 2016 [Archived]
Considerations where member ceased to be in DB contracted-out employment before 6 April 2016 [Archived]

The following Pensions guidance note provides comprehensive and up to date legal information covering:

  • Considerations where member ceased to be in DB contracted-out employment before 6 April 2016 [Archived]
  • When would a member cease to be in contracted-out employment?
  • Next steps following cessation of contracted-out employment
  • Preservation
  • Transfer to another scheme
  • Buy-out
  • Contribution equivalent premium
  • Other ways of securing COSR rights

THIS PRACTICE NOTE APPLIES IN RELATION TO SCHEMES THAT WERE CONTRACTED-OUT SALARY-RELATED SCHEMES BEFORE 6 APRIL 2016

Contracting-out on a salary-related basis (also known as DB contracting-out) was abolished on 6 April 2016. All contracted-out members therefore ceased to be in contracted-out employment on and from that date. For more information, see Practice Note: Abolition of DB contracting-out—an introduction. For more information generally on contracting out, see Practice Note: Contracting-out of the additional state pension—what does it mean?

This Practice Note describes the considerations that were applicable when a member of a contracted-out salary-related (COSR) scheme ceased to be in contracted-out employment:

  1. before 6 April 2016, and

  2. at a time when the scheme continued to be a COSR scheme

Note that different considerations applied when a member ceases to be in contracted-out employment (before 6 April 2016) as a result of a scheme ceasing to be a COSR scheme. For more information on the considerations that were applicable in such circumstances, see Practice Note: Considerations where scheme ceased to be a COSR scheme before 6 April 2016 [Archived].

When would a member cease to be in contracted-out employment?

Before 6 April 2016, a member ceased to be in contracted-out employment when:

  1. the member's service with the sponsoring employer terminatedSI 1996/1172, regs 43(1)(a)–(b), (2)

  2. the contracting-out certificate covering the member's employment was surrendered or cancelled (for more information on which, see Practice Note: Surrendering a DB contracting-out certificate before 6 April 2016 [Archived])SI 1996/1172, reg 43(1)(c)

  3. the contracting-out certificate covering the member's employment was varied, or the nature of the member's employment changed, so that their employment ceased to be covered