Additional State Pension built up in tax years up to and including 2001-2002 is usually known as State Earnings Related Pension Scheme (SERPS). For tax years from 2002-2003 onwards it has been reformed and the Additional State Pension built up is known as State Second Pension.
State Earnings Related Pension Scheme (SERPS) will be payable if, in any tax year since April 1978, standard rate Class 1 contributions have been paid on earnings between the Lower and Upper Earnings Limits. Any SERPS earned between 1978-1979 and 1996-1997 tax years (inclusive) are reduced as a result of membership of a contracted-out occupational pension scheme or an Appropriate Personal Pension scheme. For the tax years from 1997-1998 to 2001-2002 (inclusive) members of contracted-out pension schemes or Appropriate Personal Pension schemes no longer build up entitlement to SERPS.
From 6 April 2002 State Second Pension has reformed SERPS. Broadly, the reforms provide a more generous additional pension to employees on low earnings and, for the first time, include certain carers and people with a long term illness or disability, whose working lives have been interrupted or shortened. State Second Pension may provide some benefit to those in contracted-out and Appropriate Personal Pension schemes by means of ‘top up’ calculations, depending on the type of scheme and the level of their earnings. Contributions must be paid within the time limits and will only count for benefit from the date they are paid.
Further information can be found on The
Pension Service Website.