Contracting out of State Second Pension

Key Points

  • Prior to 6 April 2016, an occupational pension scheme could contract out of the Additional State Pension on a defined benefit (DB) basis.
  • Prior to 6 April 2012, an occupational or personal pension scheme could contract out ot the Additional State Pension on a defined contribution (DC) basis.
  • In a contracted-out scheme the member and his employer pay a lower rate of National Insurance contributions. The member receives an amount of pension from their contracted-out scheme which is at least as good as the Additional State Pension given up.
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