RPSM02403030 - Employer Pages: Registering a pension scheme with HMRC: Contracting out of the state second pension scheme on or after 6 April 2006: I have not set up my own scheme - I have chosen a commercially available pension scheme for my employees

I have not set up my own scheme - I have chosen a commercially available pension scheme for my employees

As an employer, your involvement extends only to the decision, when choosing a private pension scheme, whether you will offer your employees membership of an appropriate personal pension scheme (APP), or a pension scheme which is not contracted out - and to select a scheme accordingly.

All stakeholder pension schemes and many personal pension schemes are contracted out as APPs.

If you choose an APP the provider of the scheme applies for the scheme to be contracted out. It is then up to each member to decide whether he/she wants to be

• a contracted out member, in which case he/she will ultimately receive

• a private pension from the APP, and
• a pension to replace the additional state pension, also from the APP; or

• a non-contracted out member, in which case he/she will ultimately receive

• only a private pension from the APP, and
• the state second pension, which will be paid by the Department for Work and Pensions (DWP).

As you are not running this pension scheme yourself, you do not have to take further action regarding contracting out.