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HMRC internal manual

National Insurance Manual

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HM Revenue & Customs
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Class 1 structural overview: types of National Insurance contributions: contracted-out rate NICs

Employees whose employers operate occupational pension schemes and choose to join them, are normally contracted-out of the State Earnings Related Pension Scheme (SERPS) and from 6 April 2002 the State Second Pension, and pay contracted-out (rebated) rate NICs. Employees over state pension age (see NIM36000) cannot be in contracted-out employment.

See NIM01021 for further information on types of contracted-out schemes. For further information about the fiscal structure of contracted-out rate NICs, see NIM01018.  For further information about married womens’ and widows’ reduced rate NICs, see NIM30000 and NIM31000 respectively.

For information on the structure of primary Class 1 NICs from 6 April 2003, see NIM01100 onwards.

For information on the structure of primary Class 1 NICs from 6 April 2009, see NIM01200 onwards.