Protected rights

If you're employed you can normally contract out of state second pension. One option is to contract out using a personal pension, stakeholder pension or a money purchase occupational scheme. This means that you give up your right to benefit from state second pension for the period you are contracted out. As a result, your state second pension benefit will be reduced. In return, HM Revenue & Customs sends your selected pension provider a rebate of part of your own and your employer's National Insurance Contributions. These are invested in your plan and the fund that this produces is called protected rights. There are special rules about the benefits you can get from protected rights and when they can be taken e.g. you cannot usually take your protected rights benefits before age 60.