Contracting out of Additional State Pension

Employed people did not usually build up Additional State Pension for periods when they 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 schemes:

• a personal or Stakeholder pension scheme; or

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

Members of a contracted-out workplace pension did not contribute to the Additional State Pension and paid lower NICs. However, contracting out arrangements ended from 6 April 2016 with the introduction of the new State Pension.

If you were already contracted out, your NICs will increase to your standard rate after this date.

Those previously 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 been building up entitlement.

www.gov.uk/additional-state-pension/contracting-out.