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Lost touch with an old SERPS pension?
Have you ever been employed and heard the phrase “being opted out”? Not sure what it means? Well chances are you could have a pension fund with some money in it!
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What is a SERPS (S2P / State 2nd Pension / Graduated pension) Pension
SERPS stands for the State Earnings Related Pension Scheme, otherwise known as “Graduated Pension”, “S2P” or “state 2nd pension”. It is part of your state pension and you were allowed to “opt out” in favour of a private pension arrangement.
SERPS was introduced in 1978 as a top-up to the basic state pension. The amount you’d receive from SERPS was related to your earnings over your working life, and you’d only be eligible for the scheme if you were an employee making Class 1 National Insurance Contributions. Self-employed people were not eligible for SERPS. In April 2002, SERPS was replaced by the State Second Pension.
Tracing a SERPS pension
We provide all prospective clients with our no-cost and no obligation tracing service! Obviously we hope to show you how great we are so you will want to stay and use our advice services!
We have helped many clients get back in touch with their old pensions and a common type of pension to lose touch with is one derived from being “opted out” of either “graduated pension, SERPS or S2P (State Second Pension)”! You may have been advised many moons ago that “opting out” was good for you and was usually completed via an occupational (or employer backed) scheme. Simply put, the Government rebated some of your national insurance into a private pension instead!
Now to find a lost SERPS/Graduated/S2P plan you need to:
- Start by calling the Governments help line on 0300 200 3500 and you will get through to an automated answer machine.
- At the prompt, you need to say “National Insurance Contributions”.
- At the 2nd prompt, say “Contracted out”.
You will then get through to a real live human!!
You will then need to ask if you have ever been contracted out of SERPS/Graduated/S2P and the call handler will take you through some security, providing you with details of the provider and even policy numbers if you were!
Security will include your full name (and maiden names), date of birth and national insurance numbers so get prepared.
There are many different types of pensions, for information on their differences and what you can do click here: https://financialfortress.co.uk/what-we-offer/pensions/personal-pensions/
At Financial Fortress, we hold the Pension Transfer Gold Standard from the PFS, have been awarded the title of Pension Transfer Specialists by the FCA and one of the few companies that hold the correct permissions to advise on all pensions. Remember, we are completely independent and have extensive experience with all pensions so you will be in very safe hands indeed!
Remember, we are completely independent so work with every single pension provider in the UK and beyond!
Before you claim your pension, it is vital you get good advice – you could lose some irreplaceable guarantees if not investigated properly!
Remember, once you have committed to taking your pension, usually via an annuity, your decision is irrevocable and can’t be changed.
If you’re entitled to SERPS, you’ll start receiving it once you reach state pension age. If you retired before April 2016, then you’ll receive both the basic and the additional state pension. Anyone retiring after this date will get a single payment made up of the basic and additional state pension.
There’s no set amount of additional state pension you’ll receive – the amount you’ll get depends on how much you earned, the number of years you made National Insurance contributions and whether you contracted out. Seek advice if you’re not sure how much you might get, or request a State Pension Forecast by completing a “BR19”. If you were contracted out and have a lower State Pension as a result, you may be able to boost your State Pension income either by continuing to work, or by claiming National Insurance credits. You might be eligible to claim credits if, for example, you left work for a while to bring up your children, or because you weren’t able to work due to illness.
If you did opt out of SERPS and have a protected rights pension, you can access this pension from the age of 55. You can take the first 25% of this pension as a tax-free lump sum if you want to. After that, any withdrawals will be taxed at your income tax rate. If you’re a basic rate taxpayer, that means you’ll be taxed at 20%, rising to 40% or 45% if you’re a higher or additional rate taxpayer.
Many people chose or were advised to opt out of SERPS and instead had their National Insurance rebates paid into a personal pension in the hope that this would provide them with better benefits at retirement. If you were contracted out of SERPS your National Insurance contributions were lower than those effectively “opted in” and also had some of their national insurance paid into an alternative private pension. However, they had given up their right to having additional benefits paid by Government! (meaning they now have less state pension!)
Pensions built up from National Insurance rebates are known as ‘protected rights’ pensions. Initially, only those who belonged to defined benefit or final salary pensions could contract out of SERPS, but in 1988, the government allowed those in defined contribution or money purchase schemes to opt out as well. People were offered incentives to leave SERPS, so for the first five years, the government contributed an extra 2% of your earnings into a personal pension.
In April 2012, only people belonging to defined benefit or final salary schemes were contracted out and paid a lower rate of National Insurance Contributions. Anyone belonging to a defined contribution scheme will have been contracted back in, paying National Insurance at the full rate. Contracting out for those with defined benefit pensions ended in April 2016.
You can find out if you were contracted out getting in touch with your dedicated expert. Those who worked in the public sector such as people working for the NHS, the police or the armed forces, are more likely to have been contracted out than people working in other professions.
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