Contracted out

Contracting out means opting out of the State Second Pension (S2P) which, before 2002, was known as the state earnings-related pension scheme (SERPS). It means that you pay less National Insurance. Once the single-tier State Pension starts in 2016 contracting out will no longer exist. Any time spent contracted out will be deducted from your State Pension entitlement, but it is possible to rebuild this entitlement.