Contracted out of the Additional State Pension
How contracting out affects your amount
How your State Pension amount is affected depends on when you reach State Pension age.
If you reached State Pension age before 6 April 2016
You might not get any Additional State Pension, or get a small amount, from the time you were contracted out.
You still get the basic State Pension if you were contracted out.
If you’re on a low income you can apply for Pension Credit.
If you reached State Pension age on or after 6 April 2016
If you were contracted out before 6 April 2016, you might not get the full rate new State Pension of £221.20 a week.
An amount is taken off your new State Pension if you were contracted out. This is because either:
- you paid National Insurance contributions at a lower rate
- some of the National Insurance contributions you paid were used to contribute to a workplace or private pension
How much is taken off depends on how long you were contracted out and your earnings at the time. While you were contracted out, you were paying into your workplace or personal pension instead.
Increasing your State Pension
You might be able to increase your State Pension by adding qualifying years onto your National Insurance record.
Each full qualifying year from 5 April 2016 until you reach State Pension age will add about £6.32 a week to your new State Pension. You can read more detailed information about how this is calculated in ‘Your new State Pension explained’.
Examples of how contracting out might affect you
The amount of State Pension you’ll get will vary depending on how many years you were contracted out.
Example 1
Sam’s State Pension age is expected to be 67. They were contracted out which has reduced their estimated State Pension to £200 per week. This is less than the full rate of State Pension.
Sam is still working and paying National Insurance which adds more qualifying years to their record. Each qualifying year they add is worth £6.32 per week. This means the £21 deduction will be cancelled out by adding 4 more qualifying years before they reach State Pension age.
Example 2
Jo is 60 years old and they have just stopped working. They were contracted out which reduced their forecast State Pension to £170 per week. They will reach State Pension age at 67.
Jo could choose to pay 7 years of voluntary National Insurance contributions, to get qualifying years when they are not working. Each additional qualifying year will increase their amount by £6.32 per week, but Jo will not reach the full rate of the new State Pension.