State earnings related pension scheme (SERPS) meaning

Brexit impact The UK ceased to be an EU Member State on exit day, 31 January 2020. Under the Withdrawal Agreement, the state pension and benefit rights of UK nationals residing in the EU, European Economic Area (EEA) or Switzerland are protected. See: Benefits and pensions for UK nationals in the EU, EEA or Switzerland. Likewise, information on the entitlements of EEA and Swiss citizens to UK benefits and state pensions is set out at: Benefits and pensions for EEA and Swiss citizens in the UK. State pensions A state retirement pension depends on an individual’s National Insurance (NI) contribution record and may consist of up to three elements: the basic old age pension the State Second Pension (S2P—formerly the State Earnings Related Pension Scheme, SERPS) the graduated pension Payments are generally made gross, with tax collected through Pay As You Earn (PAYE) against a person’s other income, such as an occupational or private pension. Income tax can also...

A-day 'A-day' is the widely used term for the broad pension tax 'simplification' reforms that began on 6 April 2006. The changes covered: how much pension contribution was allowed, the kinds of schemes an individual could invest in, the sums that could be taken (and when), and the choices available for any remaining fund. A-day also introduced the annual allowance and the (now abolished) lifetime allowance. See: Annual allowance and Lifetime allowance. AFPS AFPS: Armed forces pension scheme; see Practice Note: Public sector pensions and family proceedings. Accrual rate The speed at which pension benefits build as pensionable service is completed in a final salary scheme, eg 1/60 for each year of pensionable service. Accrued benefits The benefits earned in respect of service up to a specified date. Added years Extra pension provided by adding further years of pensionable service in a salary-related scheme. Such additional years are secured via transfer payments or through additional voluntary contributions/augmentation...

Interaction with the additional State pension Up to 6 April 2016, State pension provision operated on two tiers: the basic State pension — a flat-rate amount, largely determined by National Insurance contributions (NICs) actually paid or credited, the additional State pension, called the State Second Pension (S2P) — as the name suggests, it sat on top of the basic State pension and was linked to a person’s earnings. Before April 2002, the additional element was known as the State Earnings Related Pension Scheme (SERPS). Prior to 6 April 2016, pension schemes could either contract in to, or contract out of, the additional State pension. Where a scheme was contracted in, members would, subject to their earnings, receive the additional State pension alongside their basic State pension. Where a scheme was contracted out, members would not receive the additional State pension. In return: the scheme had to deliver contracted-out benefits broadly at least equivalent to the additional State pension...