A Guide to Your Pension Options

Second Pensions and How they Work

Additional State Pension (SERPS and State Second Pension)

If you are an employee, you may be able to build up an additional State Pension on top of the basic State Pension. Up to April 2002, the additional State Pension was normally called the State Earnings-Related Pension Scheme (SERPS). SERPS was based on your record of National Insurance contributions and your level of earnings as an employee.

On 6 April 2002, the State Second Pension reformed SERPS to provide a more generous additional State Pension for low and moderate earners, and certain carers and people with long-term illness or disability. (Any SERPS entitlement that has already been built up will be protected both for those who have already retired and for those who have not yet reached State Pension age.) The State Second Pension gives employees earning up to £24,600 a better pension than SERPS, whether or not they are contracted-out, with most help going to those on the lowest earnings (up to around £10,800).

Inherited State Second Pension

The maximum amount of State Second Pension that a surviving husband or wife can inherit will be 50 per cent.

Inherited SERPS

We have introduced changes to reduce the maximum amount of SERPS that a widow or widower may inherit from their husband or wife. How much someone will be able to inherit will depend on their circumstances.