Some people were contracted out of the Additional State Pension. Contracting out is the facility that allowed people to leave the Additional State Pension and build up benefits in a workplace or personal pension. This option was removed for many schemes from 6 April 2012 and stopped for defined benefit schemes from 6 April 2016.
If you were a member of a defined benefit scheme and you were contracted out, you and your employer would have paid less in National Insurance. In return for these National Insurance savings the pension had to promise to provide a minimum level of benefit which was broadly equivalent to what you would get, had you not been contracted out.
If you were a member of a money purchase scheme (including personal and stakeholder pensions) some of the National Insurance savings made by you and your employer were invested into your pension instead. These contributions were held as ‘protected rights’. In some cases, restrictions may apply when you come to use them at retirement.
In both cases, you would be entitled to basic State Pension for the periods you were contracted out, but not Additional State Pension. This means your State Pension might be lower but you will have additional benefits held in a private pension arrangement.
Your State Pension could be made up of one or several parts: