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What is a SERPS pension?

Started in 1978, a State Earnings Related Pension Scheme, also known as SERPS, was a government pension scheme that allowed people extra provisions for retirement alongside the state pension. The amount you’d receive from SERPS depended on how much you’d earned throughout your work-life, and you’d only be eligible if you made Class 1 National Insurance Contributions.

SERPS scheme members received an extra pension of 25% of their earnings (above an earning limit). The upper earning limit was around seven times the lower one. Later, the amount was reduced to 20% for those retiring after 2010.

You see, although the ordinary state pension is available for every eligible citizen in the UK, it is generally considered to be insufficient for life in retirement. In 2002 SERPS was replaced by the State Second Pension and then Additional State Pensions after that.

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Why were SERPS pensions created?

SERP (State Earning Related Pension Scheme) pensions were created to help people top-up their state pension income.

SERPS have since been replaced by Additional State Pensions that are eligible for men born before 6th April 1951 and women born before 6th April 1953. You will receive Additional State Pension automatically, unless you’ve chosen to contract out of it.

For Additional State Pensions, what you receive depends on the following:

  • How many years you’ve paid national insurance
  • Your earnings
  • Whether you’ve contracted-out
  • Whether you’ve previously topped up your state pension

However, many people were advised to opt-out of SERPS by their employers or independent financial adviser. This meant, their National Insurance payments were redirected to a personal pension on the promise they’ll reap greater financial rewards.

Sadly, for some, this wasn’t the case. And in many cases, they would have been better off remaining in SERPS than contracting out. If you were advised to contract-out of your SERPS pension, you may be eligible to make a claim for negligent advice. Contact us today for a free initial assessment and further guidance.

If you transferred your Jaguar Land Rover pension, you may be able to claim. Speak with a specialist for free to discuss your options.

Get Claims Advice are a claims management company. You can do the claim yourself directly to the adviser or pension company for no charge. You can also approach the Financial Ombudsman Service and Financial Services Compensation Scheme for free if you wish for them to review your case, providing you have approached the adviser or pension provider first, and it falls within their remit.

Did I have a SERPS pension?

If you paid Class One National Insurance contributions you might have a SERPS pension, or have already opted out of SERPS.

To check if you have a SERPS pension, login to your Personal Tax Account with HMRC which should show you your status. It may be that you need to create an account, in which case you will likely require your NI number, a recent payslip or P60, and a valid UK passport.

What was contracting out of SERPS?

Contracting out (sometimes called opting out) of SERPS meant that people partially or completely gave up their SERPS pension benefits in exchange for a higher private pension and paying smaller National Insurance qualifications (or redirected NI contributions).

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Did I contract-out of my SERPS pension?

You can find out if you have contracted out of your SERPS pension by asking your employer or checking your payslip, which will say whether you have contracted out of your SERPS pension or not.

In the majority of cases, people who have contracted-out of a SERPS pension will pay less in National Insurance contributions and pay more into another private pension pot.

To begin with, the only people who could contract-out of their SERPS pension were those with final salary pension schemes. This includes nurses, armed forces, public sector workers and the police for example. This changes, however, in 1998, where people with defined contribution schemes were also allowed to contract-out.

Have I got a mis-sold SERPS pension?

There has been a rise in claims for mis-sold SERPS pension compensation in recent years as more and more people discover they were negligently advised to contract-out.

The first thing to do, is check whether you contracted-out of your SERPS pension. You can do this by checking with your employer or on your payslip. If you worked in the public sector, you’re more likely to have contracted-out.

If you have contracted-out of a SERPS pension and are now worse-off for it, you may have a claim to make. Find out more below about making a claim for a mis-sold SERPS pension.

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Can I claim compensation on my mis-sold SERPS pension?

Sadly, some people received the wrong advice when it came to SERPS, and may now be worse off in retirement because of it.

Usually, this is because they were told to Opt-Out of SERPS by brokers or financial advisers.
You MAY be able to claim for SERPS compensation if:

You were advised to contract out of SERPS by a Financial Adviser
The date of the advice you received was between 1 July 1988 and 5 April 1997
When you contracted out, you were above 45 years of age (for Males) or 40 years of age (for Women)
You were earning over £10k per year, every year.

For more information, you can contact one of our mis-sold pension specialists for a FREE initial assessment on your claim.

SERPS FAQs

How did SERPs pensions work?

In a nutshell, SERPS scheme members received an extra pension of 25% of their earnings (above an earning limit). The upper earning limit was around seven times the lower one. Later, the amount was reduced to 20% for those retiring after 2010.

What was contracting out of SERPs?

Contracting out (sometimes called opting out) of SERPS meant that people partially or completely gave up their SERPS pension benefits in exchange for a higher private pension and paying smaller National Insurance qualifications (or redirected NI contributions).

What is SERPS compensation?

Sadly, some people received the wrong advice when it came to SERPS, and may now be worse off in retirement because of it.

Usually, this is because they were told to Opt-Out of SERPS by brokers or financial advisers.

You MAY be able to claim for SERPS compensation if:

  • You were advised to contract out of SERPS by a Financial Adviser
  • The date of the advice you received was between 1 July 1988 and 5 April 1997
  • When you contracted out, you were above 45 years of age (for Males) or 40 years of age (for Women)
  • You were earning over £10k per year, every year.

Did I have a SERPS pension?

If you paid Class One National Insurance contributions you might have a SERPS pension, or have already opted out of SERPs.

To check if you have a SERPS pension, login to your Personal Tax Account with HMRC which should show you your status. It may be that you need to create an account, in which case you will likely require your NI number, a recent payslip or P60, and a valid UK passport.

Can I cash in my SERPS pension?

If you are entitled to a SERPS pension, you can start drawing it when you reach pensionable age. Since April 2016, anybody eligible for a SERPS pension may receive a single payment combined with their State Pension.

What is the maximum SERPS pension I can get?

Through the current additional state pension, the maximum amount you could get is £176.41 per week. Of course, whether you’re eligible for the maximum amount depends on how long you were contracted into your SERPS, and how much you earned throughout your working life.