Understanding the additional State Pension

The additional State Pension is provided by the government. It can give you extra money on top of your basic State Pension. You may have a pension that 'contracts' you out of the additional State Pension.

Find out more about the additional State Pension and what contracting out is.

Who gets the additional State Pension?

You can build up additional State Pension if you are below State Pension age and you are:

employed and earning over £5,044 (from any one job)
looking after children under 12 years old and claiming child benefit
caring for a sick or disabled person for more than 20 hours a week and claiming Carer's Credit
a registered foster carer and claiming Carer's Credit
receiving certain other benefits due to illness or disability

If you are employed and have a pension then you may be 'contracted out' of the additional State Pension. This means you probably do not build up additional State Pension. Find out more in 'Contracting out of the additional State Pension' below.

SERPS and the State Second Pension

The additional State Pension has gone under different names in the past. Until April 2002, the additional State Pension for employees was called the State Earnings-Related Pension Scheme (SERPS). The amount of SERPS pension you received was based on a combination of the amount of your National Insurance contributions, and how much you earned.

In April 2002, SERPS was reformed and the additional State Pension is now known as the State Second Pension. It gives a more generous additional State Pension to low and moderate earners, and certain carers and people with a long-term illness or disability.

By around 2030, or shortly afterwards, the State Second Pension will become a simple, flat-rate weekly top-up to the basic State Pension.

Any SERPS entitlement you have is protected – so if you built up an entitlement to additional State Pension before April 2002 you will keep it, whether or not you've already reached State Pension age.

Contracting out of the additional State Pension

If you are employed and have a company, stakeholder or personal pension then you may opt out of the additional State Pension. When a pension opts out of the additional State Pension this is called 'contracting out'.

While you are contracted out, you will not normally build up additional State Pension, but you are compensated for this. The way you are compensated depends on the type of pension you have.

Company pension

If you have a company or occupational pension, both you and your employer pay a reduced rate of National Insurance contributions.

Stakeholder or personal pension

If you have a stakeholder or personal pension, you pay full rate National Insurance contributions. But the government pays part of those contributions into your pension scheme for you.

Basic State Pension and contracting out

Contracting out of the additional State Pension does not affect your basic State Pension. It is not possible to contract out of the basic State Pension.

Changes to contracting out from 6 April 2012

From 6 April 2012, contracting out of the additional State Pension will be abolished for certain kinds of pensions. From this date you will no longer be able to contract out of the additional State Pension through:

a personal or stakeholder pension
a company or occupational pension scheme which is contracted out on what is called a ‘money purchase’ or ‘defined contribution’ basis

If you are contracted out through one of these schemes on 6 April 2012, you will automatically be brought back into the additional State Pension. You will begin to build up additional State Pension from this time. Download 'Contracted-out pensions' to find out more.

To find out what a money purchase and a defined contribution pension is, see 'What happens to your company pension when you die'.

Find out if your pension is contracted out

If you have a company pension, your employer should tell you if it is contracted out.

Track down an old pension

If you think you may have an old pension but can't remember the details then the Pension Tracing Service may be able to help you.

Pension Tracing Service - trace a personal or company pension scheme

Who does not get additional State Pension?

You do not build up additional State Pension if one of the following applies to you:

you are self-employed (because you pay lower National Insurance contributions)
you are unemployed
you are in full-time training

You may get credits towards your basic State Pension while you are not working, but you do not build up additional State Pension.

In some cases, if you are unable to work because of illness or disability, you will not build up additional State Pension.

How to claim the additional State Pension

If you have earned the right to additional State Pension then you should receive it when you claim your basic State Pension. See 'Understanding the basic State Pension' to find out more about how you can claim your State Pension.

When can I claim the additional State Pension?

If you are entitled to additional State Pension then you can claim it when you reach State Pension age. See 'Calculating your State Pension age' to find out when your State Pension age is.

You can also choose to take your State Pension later on. See 'State Pension deferral' to find out more.

Understanding the additional State Pension

Who gets the additional State Pension?

SERPS and the State Second Pension