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What is SERP’s?

The State Earnings Related Pension (Serps) was the name of the government’s additional pension scheme until April 2002. Anyone who was earning more than £75 a week and had not “contracted out” would have been building up an additional pension under Serps. It is now called the State Second Pension. However, people who made contributions before April 2002 will receive an additional pension based on Serps way into the future.

Why was SERP’s Replaced?

The government replaced Serps with the State Second Pension, because it wanted to give certain disabled people and those with long-term illnesses the chance to benefit from an additional pension scheme. The new scheme also fits in with the government’s political agenda, as it increases support for low to middle income earners. While the State Second Pension is still related to earnings, people on modest earnings who qualify under the rules are much better off under this system than Serps.

Am I a Member?

If you earned enough and paid employees’ National Insurance Contributions, you were automatically a member of Serps. This is known as “contracting in”. Serps was related to earnings, so the amount people will get at state pension age will vary. Members of qualifying private pension schemes could “contract out” of Serps. If employees joined a contracted-out occupational pension scheme, they and their employer would pay lower National Insurance contributions. If you contracted out of Serps using a personal pension plan or a stakeholder pension plan, the Government paid part of your National Insurance contributions into the plan once a year in the form of a rebate.

The State Second Pension (S2P)

In April 2002, the State Second Pension (S2P) reformed Serps to provide a more generous additional State Pension for low and moderate earners, and to extend access to include certain carers and people with long-term illness or disability. (Any Serps entitlement already built up is protected both for those who have already retired and for those who have not yet reached State Pension age.)

What’s changed then?

S2P gives employees earning up to £31,800 (in 2009/10) a better pension than Serps, whether or not they are contracted out into a private pension, with most help going to those on the lowest earnings (up to £13,900 in 2009/10).

How do I get it?

When you make your claim for a State Pension any S2P due to you will also be calculated. While you’re working you have the option to opt out of the second state pension and can ask that your NI contributions be redirected towards a company pension scheme, a personal pension or a stakeholder pension. But from April 2012 there will no longer be the option of contracting out.

Qualifying for S2P

Anyone employed by a company and earning more than the National Insurance Lower Earnings Limit of £5,044 a year in the 2010/11 tax year. Also, certain carers and those who can’t work through illness or disability will be treated as though they were earning £13,900 a year – but to qualify they must meet certain conditions. As a carer, you need to be looking after a child under six and claiming child benefit; or be looking after an ill or disabled person and be eligible for Home Responsibilities Protection; or be entitled to

Invalid Care Allowance.

Criteria for the long-term disabled are being entitled to long-term Incapacity Benefit or Severe Disablement Allowance; and, on reaching pensionable age, to have worked and paid Class 1 NICs, or to be treated as having done so, for at least one tenth of your working life since 1978. As under Serps, both the self-employed and unemployed are excluded.

Why Choose Us?

  • Our pension review service including the initial appointment is FREE and have no obligations
  • Our dedicated pension team are readily available to help with your questions or concerns by phone or email
  • Our process is simple and requires little effort from yourself, the value of pension and the income they produce can fall as well as rise. You may get back less than you invested.

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Contact Details

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Solent Way
PO15 7FN

Tel: 08000 271 300
Fax: 01489 584 455

Email: enquiries@swiwgs6ew.gb-02.live-paas.net

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