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Individuals constantly need to reconsider the situation, and assess whether to remain contracted out or to contract back in.
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Once the decision has been made, the DWP will need to be notified,
usually via the pension provider.
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For occupational schemes operating the GMP or requisite benefits
(i.e. reference scheme test), a Contribution Equivalent Premium
(CEP) may be paid to the State when an individual leaves contracted
out employment without the right to a preserved pension. The CEP
effectively reinstates all SERPS and S2P entitlement, and removes
any GMP liability.
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Where a scheme operating the GMP or requisite benefits test ceases
to be contracted out, members are reinstated into SERPS and S2P
by payment of Accrued Rights Premiums (ARP). Where there are pensioners
under such a scheme, their SERPS/S2P entitlement to replace the
entitlement will be purchased by Pensioners Rights Premiums (PRP).
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Where a COMP scheme winds up, or an individual leaves with protected
rights, a Contracted Out Protected Rights Premium will be paid to
secure SERPS/S2P benefits but only so far as the protected rights
fund provides. An Appropriate Personal Pension scheme will fulfil
the same function by paying a Personal Pension Protected Rights
Premium (PPPRP).
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A Transfer Premium may be paid to the DWP to reinstate SERPS/S2P
where an individual transfers from a GMP/requisite benefits test
based, contracted out scheme to one which is not contracted out.
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An individual will not be able to buy benefits back into the state
scheme from 6 April 1997, unless he has less than two year's service,
where contracting out is through an occupational pension scheme.