The government has decided from 6th April 2012 to stop allowing employed people to choose to opt out of the Second state pension (S2P) unless they contribute to a Final salary (Defined benefit) pension scheme. The means that the National insurance rebates to do so will no longer be paid to your personal pension scheme from that date.

If you are currently contracted-out of S2P using a personal pension(defined contribution), this means that from 6th April 2012 you will be contracted back in and have no choice but to build an “entitlement”  to the State Second Pension.

Now obviously the value and growth of a personal pension is based on the underlying assets it holds,  and in these current conditions many people would have lost money on the value of their pensions. However it is still your own “pension pot” which cannot be taken away from you.

The problem is by having no choice but to be tied into the government scheme the money is no longer in your personal ”pension pot” but is subject to a future government agreeing to actually pay you out the ”entitlement” you have accumulated. The isssue is that there is no government pension pot in existence – the S2P is paid out of the current taxes and NI contributions.

With an increasing older population will the intake be enough in future years to pay out your accumulated “entitlement”. I personally would not be depending on it.