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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.

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.

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Why were SERPS pensions created?

As we say, SERPS were created as a reward for workers, allowing them to have more in retirement in addition to the state pension.

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Thousands did, and they may be able to make a claim

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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.