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State second pension and Serps explained

Find out how state second pension works, how much additional state pension you could get as a result and more on the Serps, S2P and the new state pension.

In this article
What is the state second or additional state pension? Who qualifies for state second pension? How much state second pension will I get? How do I work out how much state second pension I'll get?
What happens if I was contracted out of the additional state pension? Can I inherit state second pension? Where can I get help with my state pension?

What is the state second or additional state pension?

The second state or additional state pension was a top-up to the basic state pension.

You can no longer build  up any second state pension, but it is still an important part of the pension payment you'll eventually get when you reach state pension age.

The additional state pension had various titles over the years.

  • If you were paying into the additional state pension from 1978 to 2002, it was called state earnings-related pension scheme (Serps).
  • If you were paying in after 2002, it was called the state second pension (S2P).

'Graduated retirement benefit', a previous version of an earnings-related elated state pension top-up, operated between 1961 and 1975.

People who retired before April 2016 get a combination of the basic and additional state pension in their weekly pay packet. 

People who have retired after this date get a combination of the two in a single payment - although the actual amount you'll get is a bit more complicated to calculate as we'll explain in this guide. 

Who qualifies for state second pension?

If you were paying in to the additional state pension before 2002 under Serps, only people who were working qualified for it.

However, under S2P, which was designed to help people who are unable to work or on low incomes, the following people qualified:

  • employees earning at least £113 a week
  • people caring for one or more children under age 12 for whom they are claiming child benefit
  • people claiming carer's allowance
  • people claiming certain disability-related benefits.

People who weren't covered included the self-employed and those who have contracted out of the state second pension.

How much state second pension will I get?

The amount of additional state pension you’ll get depends on how many years you paid National Insurance for, how much you earned and whether you’ve contracted out of the scheme.

The maximum additional state pension you can get in 2018/19 is £172.28 a week (not including state pension top-up).

I reached state pension age before April 2016

There is no fixed amount for the additional state pension under old or new state pension.

If you qualified for the state pension before 6 April 2016, you might get some additional pension on top of your basic pension (£125.95 in 2018/19).

You’ll automatically get any additional state pension you’re eligible for.

I reached state pension age after April 2016

After 6 April 2016, you might get more than the full level of new state pension (£164.35 in 2018/19) if you've built up a certain amount of additional state pension.

The new state pension is paid as a single amount, but part of your payment which is above the full level of new state pension (£164.35) is called your ‘protected payment’ and reflects the additional state pension that you’ve accumulated.

Protected payments increase in line with inflation – CPI inflation measured in September the previous year for the new April tax year rise.

How do I work out how much state second pension I'll get?

How the state second pension was calculated was fairly complex, and there were different systems in place over different periods.

Your state second pension was calculated differently between 2002 and 2010, 2010 and 2012 and 2012 and 2016.

The system used between 2012 and 2016 was the most straightforward.

We've spelled out below how you might have built up additional pension in the last year it was available, 2015-16.

There were two bands from April 2012 to April 2016:

Band 1 - Flat-rate benefit of £93.60 a year (in 2015-16) for earnings of between £5,824 and £15,299

Band 2 - Accrual rate of 10% for earnings between £15,300 and £40,040

Earnings for each tax year are then 'revalued' as the you reach state pension age, usually to keep up with inflation.

They were then multiplied by the accrual rate for each band and divided by the number of years in your working life since 1978 to produce an annual additional state pension amount.

Example

Jane, age 65, has earnings of £35,000 and a working life of 40 years.

Band 1 - A flat rate of £93.60

Band 2 - £35,000-£15,300= £19,700

Jane's 'Band 2' earnings are then revalued by 2.5%, to £25,610. 

The calculation for the second part of her second state pension is £25,610 x 10%/40 = £64.03

Jane's total second state pension for the 2015-16 tax year is £157.63 (£93.60 + £64.03).

This will be added to the previous years of state second pension Jane has built up, and go into her final state pension pay when she reaches state pension age.  

What happens if I was contracted out of the additional state pension?

The government previously allowed pension savers to 'contract out' of the additional state pension.

The deal was quite simple - you paid less National Insurance (or contributions were diverted) and therefore you didn't get the additional state pension, and the money you saved in National Insurance was put into your workplace or private pension.

How contracting out worked depended on what kind of pension scheme you were saving into.

For more, visit our comprehensive guide on contracting out

Contracted out of a defined benefit scheme

If you were saving into a defined benefit pension scheme, sometimes known as a final salary plan, your employer was required to provide you with a 'guaranteed minimum pension' until 1997 that was as good as the state second pension you were giving up.

This type of contracted-out scheme pays a set amount when you retire, much like that you receive from your defined benefit pension scheme.

If you were in a contracted-out defined benefit scheme, you and your employer paid a lower National Insurance contribution, but you gave up entitlement to the additional state pension in return.

Those affected will include current and former public sector employees – civil servants, NHS employees, police officers, teachers and members of the armed forces.

Contracted out of a defined contribution scheme

Until April 2012, you could contract out of a defined contribution pension scheme in the workplace.

Both you and your employer continued paying National Insurance contributions at the normal rates, but some of these contributions were then rebated back into a private pension scheme, which were then invested on the stock market to grow your pension pot. 

The amount was known as your 'National Insurance rebate', to which the government added pension tax relief.

The private scheme had to be an appropriate personal pension (APP) or appropriate stakeholder pension (ASP).

Can I inherit state second pension?

If your spouse or civil partner dies, you may be able to inherit part of their additional state pension. There are different arrangements for Serps and the state second pension.

You can inherit up to 50% of your spouse or civil partner’s state second pension.

The maximum amount of Serps pension you can inherit depends on when your spouse or civil partner died. If they died before 6 October 2002, you can inherit up to 100%.

If they died on or after 6 October 2002, the maximum Serps pension you can inherit depends on their date of birth. The table below outlines what you might be entitled to.

Man's
date of birth
Woman's
date of birth
Maximum % of
Serps you can inherit
5 October 1937 or before 5 October 1942 or before 100%
6 October 1937 to 5 October 1939 6 October 1942 to 5 October 1944 90%
6 October 1939 to 5 October 1941 6 October 1944 to 5 October 1946 80%
6 October 1941 to 5 October 1943 6 October 1946 to 5 October 1948 70%
6 October 1943 to 5 October 1945 6 October 1948 to 5 October 1950 60%
6 October 1945 and after 6 October 1950 and after 50%

Where can I get help with my state pension?

If you want to find out how much state pension you'll get, you can get a free state pension forecast

You can see it online, using the Check your State Pension service, or by phone at the Future Pension Centre on 0800 731 0175.

You can also apply for a forecast by post using this application form

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