Being contracted out of Additional State Pension

Employed people do not usually build up Additional State Pension for periods when they are or were in a pension scheme that opted out (“contracted out”) of Additional State Pension. From 6 April 2012 contracting out of the Additional State Pension was abolished for certain kinds of pension scheme. These are:

• a personal or Stakeholder pension scheme; or

• a “money purchase” or “defined contribution” (DC) occupational pension scheme.

While you’re a member of a contracted out workplace pension you don’t contribute to the Additional State Pension and pay lower National Insurance contributions. These arrangements end from 6 April 2016 when the new State Pension comes in (see below).

Those already affected by the abolition of contracting out for some pension scheme members from 2012 should have been automatically brought back into the Additional State Pension from that time and be building up entitlement.

More information is available at: www.gov.uk/government/organisations/hm-revenue-customs/contact/pensions-helpline-contracted-out.

If you have not yet reached retirement age but wish to know how much you are likely to get from Additional State Pension, the Pension Forecast Service can give you an estimate (www.gov.uk/state-pension-statement).