Low earnings threshold meaning

In UK pensions practice, the low earnings threshold is the annual statutory figure used in the former additional state pension (the state second pension, previously SERPS) to protect low-paid employees. For each tax year, employees with National Insurance earnings above the lower earnings limit (LEL) but below the low earnings threshold were treated, for additional State Pension accrual, as if they had earnings equal to the threshold. This “deemed earnings” rule increased State Second Pension credits for low and moderate earners. The threshold was set by statutory instrument and applied in both Great Britain and Northern Ireland. From 6 April 2016, accrual of the additional State Pension ceased under the new State Pension. The low earnings threshold no longer affects future accruals but remains relevant when advising on historic entitlements, COPE estimates, past NI records, and legacy scheme communications. This concept does not apply in Ireland, where PRSI-based State Pension rules are different and no equivalent threshold operated. Usage is otherwise consistent across England & Wales, Scotland and Northern Ireland.