The Social Security (Contributions) (Amendment No. 4) Regulations 2026

Published: Thu 25th Jun 26

These Regulations amend the Social Security (Contributions) Regulations 2001 to exclude specific payments from the calculation of earnings used to determine Class 1 National Insurance contributions.

The amendment applies to members of the regular armed forces who elect to receive benefits equivalent to the 2015 Early Departure Payments scheme for their remediable service under the Armed Forces Pension Scheme 1975.

The Treasury issued these regulations with the concurrence of the Secretary of State and the Northern Ireland Department for Communities.

Arguments For

The regulations state that the amendment ensures consistency in the National Insurance treatment of pension-related benefits across different branches of the armed forces.
Proponents within the document frame this as a necessary technical update to reflect the public service pension reform remedy, specifically regarding remediable service.
The explanatory note asserts that the change allows individuals who make statutory elections under the Public Service Pensions and Judicial Offices Act 2022 to receive equivalent benefits without incurring additional National Insurance liabilities.
The document cites the Tax Information and Impact Note (2021) as evidence that the impacts of these pension reforms have been assessed and remain accurate.

Arguments Against

Legal scholars might note that the regulations rely on complex cross-references to multiple historic and contemporary Royal Warrants and Orders in Council, which may complicate compliance for administrative bodies.
Affected parties might express concern regarding the delay between the 2021 impact assessment and the 2026 implementation date for these specific amendments.
Critics could argue that the narrow scope of the disregard—applying specifically to EDP 2015 equivalent benefits under the AFPS 1975—creates a highly granular tax regime that is difficult for non-specialists to navigate.

Citation and commencement

These Regulations may be cited as the Social Security (Contributions) (Amendment No. 4) Regulations 2026 and come into force on 20th July 2026.

This section establishes the official name of the statutory instrument.

It sets the date for the new rules to become legally enforceable as 20 July 2026.

Amendment of the Social Security (Contributions) Regulations 2001

Paragraph 10A of Part 6 of Schedule 3 to the Social Security (Contributions) Regulations 2001 (pensions and pensions contributions; payments to be disregarded in the calculation of earnings for the purposes of earnings-related contributions) is amended as follows- (a) the existing text becomes sub-paragraph (1); (b) after 'payment' insert '-'; (c) from 'under' to the end becomes paragraph (a); (d) in that paragraph, for '2014 (S.I. 2014/2328).' substitute '2014 (S.I. 2014/2328); or'; (e) after paragraph (a) insert- '(b) of EDP 2015 equivalent benefits under the AFPS 1975.'; (f) after paragraph (b) insert- '(2) For the purposes of paragraph (1)(b)-

'AFPS 1975' means the occupational pension scheme arrangements for members of the regular armed forces known as the Armed Forces Pension Scheme 1975 established by Schedules 1 and 3 to each Armed Forces Pension Scheme 1975 instrument which means any of the following- (a) the Air Force (Armed Forces Pension Scheme 1975 and Attributable Benefits Scheme) Order 2010 made on 10th February 2010; (b) the Army Pension (Armed Forces Pension Scheme 1975 and Attributable Benefits Scheme) Warrant 2010 made on the 10th February 2010; and (c) the Naval and Marine Pensions (Armed Forces Pension Scheme 1975 and Attributable Benefits Scheme) Order 2010 made on the 10th February 2010;

The instruments are collectively referred to as 'each instrument' and the instrument applicable to the individual's remediable service under the AFPS 1975 is referred to as the 'relevant instrument'.

'EDP 2015 benefits' means benefits under the EDP 2015 scheme established by the Armed Forces Early Departure Payments Scheme Regulations 2014;

'EDP 2015 equivalent benefits' means new scheme benefits which- (a) are payable in relation to the individual's remediable service under AFPS 1975 as a result of a section 6 election or a section 10 election; and (b) are equivalent to EDP 2015 benefits;

'new scheme benefits' has the meaning given in section 34 of the Public Service Pensions and Judicial Offices Act 2022;

'remediable service' has the meaning given in section 1 of the Public Service Pensions and Judicial Offices Act 2022;

'Section 6 election' has the meaning given in paragraph 8(1)(a) of Schedule 4 to the relevant instrument;

'Section 10 election' has the meaning given in paragraph 12(1)(a) of Schedule 4 to the relevant instrument.'.

This section updates the list of payments that employers do not have to count as earnings when calculating National Insurance contributions.

It specifically adds benefits paid to veterans or active service members who chose to have their older pension service (AFPS 1975) treated as service under the newer 2015 pension rules.

The text provides precise legal definitions for the pension schemes and election types used by the Army, Navy, and Air Force to correct historic pension discrepancies.

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