Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Contracted-out salary-related definition

What does Contracted-out salary-related mean? A defined benefit occupational pension scheme that, before 6 April 2016, was contracted out of the additional State Pension (SERPS/S2P) by providing salary‑related benefits at least as good as the statutory reference scheme test. The concept is underpinned by the pension schemes Act 1993 (and Northern Ireland equivalent) and related regulations; it is commonly referred to as a salary‑related contracted‑out scheme or COSR. Key features included: a contracting‑out certificate issued by HMRC; reduced employer and member National Insurance; compliance with the reference scheme test for post‑1997 service creating section 9(2B) rights; and, for pre‑1997 service, accrual of guaranteed...

Former COSR schemes: legal regime for Section 9(2B) rights and GMPs from 6 April 2016, including indexation, revaluation, commutation, transfers, amendment restrictions, HMRC and GMP equalisation/conversion

Published by a LexisNexis Pensions expert

Practice notes

This practice note concerns schemes that were contracted-out salary-related (COSR) schemes before 6 April 2016

From 6 April 2016, salary-related contracting-out (often referred to as DB contracting-out) came to an end. Any schemes that had COSR status immediately beforehand automatically stopped being contracted-out with effect from that date. This practice note outlines the statutory requirements applying on and after 6 April 2016 to schemes that were COSR schemes before then. For background on the ending of DB contracting-out, see Practice Note: Abolition of DB contracting-out—an introduction [Archived]. For a general explanation of contracting-out, see Practice Note: What does ‘contracting-out’ mean for pension lawyers? They therefore no longer hold contracted-out status.

Legal framework for former COSR schemes

The principal contracting-out requirements for former COSR schemes are chiefly contained in the following legislation:

Part III of the Pension Schemes Act 1993 (PSA 1993)
the Occupational Pension Schemes (Schemes that were Contracted-out) (No 2) Regulations 2015, SI 2015/1677 (the New Contracting-out Regs)...

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Web page updated on 21/05/2026

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