State Second Pension (S2P)
The State Second Pension or S2P (also known as the Additional State Pension) is a government-administered pension that may be paid in addition to the Basic State Pension. Prior to April 2002, the system was known as the State Earnings-Related Pension Scheme (SERPS), which was based on a combination of the amount of your National Insurance contributions and how much you earned as an employee. As such, SERPS only provided for employees of companies.
In April 2002, SERPS was reformed to give a more generous additional State Pension to low and moderate earners, and certain carers and people with a disability or long-term illness.
Eligibility for the State Second Pension
During any period that you fall into any of the following categories, you will not build up your State Second Pension:
- You are self-employed
- You are not working
- You earn less than a certain amount a year (£4,940 for 2009/2010)
- You earn more than £13,900 for 2009/2010, and have contracted out of the State Second Pension and instead pay into a personal pension
- You earn more than £31,800 for 2009/2010, and have contracted out of the State Second Pension and instead pay into an occupational pension
In some circumstances, carers and people with disabilities and long-term illnesses can build up an State Second Pension even if they are not in work.
How Much is the State Second Pension?
The amount of State Second Pension you can receive depends on how much you earn during your working life, and the amount of your National Insurance contributions. In the 2009/2010 tax year, the maximum additional state pension you could qualify for was £154.70 a week.
Changes to the State Second Pension
The Pensions Act 2007 and the Pensions Act (Northern Ireland) 2008 has made the following changes for people reaching State Pension age on or after 6 April 2010:
- From April 2010, if you care for children (up to the age of 12), are a foster carer or spend at least 20 hours a week caring for one or more disabled people, then you will build up entitlement to State Second Pension.
- The current earnings-related element built up by people earning between £13,900 and £40,040 a year (in 2009/10) will be gradually withdrawn, so that people will build up entitlement on a completely flat-rate basis by approximately 2030.
- From around 2012-2015, it is expected that the S2P will become a simple, flat-rate weekly top-up to the basic State Pension, starting at around £1.60 a week for people earning the minimum amount. This added amount will go up every year to keep its value
- You will be allowed to combine National Insurance contributions from earnings in part of a tax year with credits for other parts of the same year in order to gain a qualifying year for State Second Pension.
