UK Pension Reform

Changes to State Second Pension (S2P / SERPS)

Back in 1978, the State Second Pension, which used to be known as SERPS (State Earning Related Pension Scheme), was introduced.

The idea was that the state would provide a pension to anyone who did not have an occupational pension. This idea has been changed over the years and in April 2002 the name of the scheme was changed to State Second Pension (S2P).

This is aimed at people who do not have workplace pensions and is funded through slightly higher National Insurance contributions.

At present, there is a link between your past earnings and the level of S2P payment you receive on top of your state pension.

This is going to be gradually changed until eventually, in 2030, the S2P payment will be a flat rate on top of your state pension and will no longer be linked to your past earnings.

The plan is that for each year's work you have completed, you will receive an extra £1.50 per week on top of your state pension - up to a maximum of 40 years, which equates to £60 per week.

This flat rate will gradually be introduced between 2012 and 2030. S2P payments will be linked to prices (inflation), not to earnings, unfortunately. It will also continue not to be available to self-employed people.

Read on about