Contracting-out refers to the process of opting out of the state second pension. This is an option if you pay into an occupational or private pension or if you have made full National Insurance contributions. 

The state second pension allows individuals to make extra National Insurance payments if they have not paid enough to qualify for the full state pension.

You can contract-out of the additional state pension if you join your employer's contracted-out occupational pension scheme or you have an appropriate stakeholder or personal pension scheme.

If you contract out of the state second pension you may be entitled to National Insurance rebates.

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