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Understanding the additional State Pension
The additional State Pension, or State Second Pension, is paid in addition to the basic State Pension.
Recent changes to the additional State Pension
Until April 2002, the additional State Pension for employees was called the State Earnings-Related Pension Scheme (SERPS). The amount of SERPS pension you received was based on a combination of the amount of your National Insurance contributions, and how much you earned.
In April 2002, SERPS was reformed and the additional State Pension is now known as the State Second Pension. It gives a more generous additional State Pension to low and moderate earners, and certain carers and people with a long-term illness or disability.
By around 2030 or shortly afterwards the State Second Pension will become a simple, flat-rate weekly top-up to the basic State Pension.
How the change-over to the State Second Pension affects SERPS pensions
Any SERPS entitlement you have is protected – so if you built up an entitlement to additional State Pension before April 2002 you will keep it, whether or not you've already reached State Pension age.
Spouse or civil partner inheritance of the additional pension
State Second Pension
A widow, widower or surviving civil partner can only inherit a maximum of 50 per cent of their spouse's or civil partner's State Second Pension.
SERPS
If you contributed to SERPS the maximum percentage of your SERPS pension that your widow, widower or surviving civil partner could inherit is on a sliding scale depending on when you were born and the age at which you retired.
The percentages range from 50 per cent for men born on or after 6 October 1945 or women born on or after 6 July 1950, up to 100 per cent for men born on or before 5 October 1937 or women born on or before 5 October 1942.
You can check the maximum percentage SERPS pensions for a surviving spouse or civil partner in The Pensions Service booklet, 'Inheritance of SERPS'.
How the State Second Pension helps disabled people and carers
If you are a carer, on low earnings or have long-term disabilities you can now benefit from an improved additional State Pension.
If you don't work or if you earn less than the annual National Insurance lower earnings limit (£4,680 in 2008-2009), you can still build up an entitlement if you:
- look after a child aged six or less, and you are the person who claims and gets Child Benefit
- take care of someone who is ill or disabled, and you qualify for Home Responsibilities Protection
- are entitled to Carer's Allowance (even where you don't get this because you get a benefit that pays more)
How to claim the additional State Pension
Your entitlement to additional State Pension (whether from SERPS or from the State Second Pension) is calculated when you claim the basic State Pension.
The Pension Service will normally send you the relevant forms and invite you to make a claim about four months before you reach State Pension age. For men this is 65 and 60 for women born on or before 5 April 1950. The State Pension age for women born on or after 6 April 1950 will increase from 60 to 65 between 2010 and 2020. It will increase for both men and women from age 65 to 68 between 2024 and 2046.
If you don't receive a letter inviting you to claim your pension, call The Pension Service on 0845 300 1084. Opening hours are 8.00 am to 8.00 pm Monday to Friday (excluding bank holidays) and 9.00 am to 1.00 pm on Saturday.
Contracting out – effect on additional State Pension
When you contract out you choose to pay a reduced amount of National Insurance contributions because you have joined an occupational pension scheme. As a result, you will not normally be entitled to the full State Second Pension because your additional pension will come from your employer's scheme. But you will normally be entitled to a reduced additional State Pension.
If you have a stakeholder pension or a personal pension you can still contract out if you wish, but instead of you paying a reduced National Insurance contribution, HM Revenue & Customs (HMRC) will pay an annual rebate of contributions direct into your personal pension. If you choose not to contract out you will not receive this rebate, but you will still build up entitlement to the State Second Pension.
More useful links
You can write to The Pension Service at:
PO Box 1005
Newcastle upon Tyne
NE98 1WZ
Telephone: 0845 606 0265
Fax: 0191 218 6061
The offices are open from Monday to Friday, 8.00 am to 8.00 pm.
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