A defined benefit scheme whose members do not contribute to the state second pension. Employer contributions must be sufficient for protected rights purposes, i.e. no lower than the contracted out rebate. This will ensure that on retirement all members get at least the pension they would have received if they had not been contracted out. Otherwise the actual pension depends on the performance of the pension fund’s underlying assets and is subject to IR limits as per contracted in money purchase schemes.

A premium paid to the state by a contracted out pension scheme in line with protected rights to secure SERPS benefits for a scheme member if the scheme ceased to be contracted out before 6 April 1997.

The amount of the national insurance contributions paid back into a pension scheme in respect of contracted out employees. The rebate is a flat rate for final salary schemes and appropriate personal pension schemes. For contracted out money purchase schemes it is age-related.

A contracted out defined benefit scheme based on salary-related benefits. The member’s pension benefits must be equivalent to, or better than, those specified under the reference scheme test. This means it must provide an inflation-linked pension from age 65 to a maximum of 5 per up cent p.a. where the starting pension is worked out by taking a minimum of 1/80th of the average salary over the three years prior to retirement for each year of service in the scheme, up to a maximum of 40 years. Members’ contributions are subject to normal IR limits on benefits and contributions.

1. Opting out of the earnings related part (S2P) of the state pension arrangements. Occupational pension schemes or appropriate personal pension plans must first satisfy contracting out conditions to ensure that they secure benefits that replace or improve upon those otherwise receivable under S2P. 2. Using exemption clauses in commercial contracts to ‘contract out’ of liabilities that would otherwise attach. See UNFAIR CONTRACT TERMS ACT 1977.
***
Persons may relieve themselves or restrict their liability by incorporating conditions in the agreements entered into with other parties. So long as these conditions are not contrary to common law, that can be raised as a defense.

Conditions used when plant is hired out for use in the construction or civil engineering industries. To cover the risks attaching to him under CPA, the customer should insure: loss or damage to the plant on site and under his control; loss or damage to goods during loading/ unloading; continuing hire charges while the plant is unable to work following loss or damage; legal liability covering injury to the driver/operator together with third party injury/damage arising from the use of the plant. The owner is obliged to supply a competent driver but the hirer is liable for his negligence. The CPA also issues a crane hire agreement under which the customer is responsible for planning and supervision and ensuring a safe system of work.

Renewable cover for contractors who own, hire-in or hire-out plant (mobile plant, machinery and equipment) against unforeseen and accidental physical loss due to external causes; internal causes such as breakdown and wear and tear are excluded. The policy operates whilst at work or at rest or during dismantling or erection, loading, unloading or transit. For hiredin plant the cover includes legal liability for negligent breakdown and continuing hire charges. For hired-out plant the cover can be extended to indemnify the hirer. Cover can be arranged as a part of a contract works policy or, in some cases, motor insurance as special types.

Allows someone, not a party to the contract, to bring an action under it if: (a) the contract so provides or (b) it confers a benefit upon him, unless it appears that the contracting parties did not intend the term to be enforceable by him. Where the obligated party is aware that the third party has relied on the term, he may not rescind or vary the contract to the third party’s detriment. The express terms of the contract may require the third party’s consent to a variation. Insurance policies generally exclude the provisions of the Act.

1. IPRU (INS) refers to: (a) fidelity bonds, performance bonds, administration bonds, bail bonds, customs bonds, or similar contracts of guarantee effected in return for premiums; (b) tontines; (c) capital redemption contracts and pension fund management contracts when effected or carried out by a body that effects or carries out insurance contracts; (d) contracts to pay annuities on human life; (e) contracts of a kind referred to in art. 1(2)(e) of the First Life Directive; and (f) contracts of a kind referred to in art. 1(3) of the First Life Directive. 2. A contract, whereby one party, an insurer, agrees in return for a consideration from another party (the premium) to pay the insured money, or its equivalent, upon the happening of certain events. Three essentials are: the consideration (the premium), promise of payment to the insured and a specified event.