State Earnings-Related Pension Scheme

Employees who paid full Class 1 National insurance contribution between 1978 and 2002 earned a SERPS pension.Pensions earned before 6 April 1988 were not reduced and the change was to be phased in for people retiring between 1999 and 2009.In return for opting out of SERPS the employer would pay reduced National Insurance contributions.To encourage the take-up of this arrangement the government made an extra incentive payment into each pension scheme where somebody contracted out using this route.The main reason for the change was to provide a larger pension to people of low earnings.
UK GovernmentState Second PensionNational insurance contributionbasic state pensiontax yearGuaranteed Minimum Pensionmoney purchase pension schemesGraduated Retirement BenefitNew State Pension.