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Saga receives assurances that SERPs or S2P will not be cut back

People who are in line to receive more than £140 a week through a combination of SERPs or S2P and the basic state pension will still receive higher payouts under the proposed reforms, according to Saga.

The group says it has received assurances from Government that those who may have accrued large sums through SERPs or S2P will not be unfairly penalised by the introduction of a flat-rate state pension.

Saga says: “We are assured that if existing state pension entitlement would be over £140 a week, then you will still get the higher amount, so SERPS or S2P will not just be cut back to £140. Lots of people were worried about that thinking their SERPS would be reduced, but that is not the case apparently.”

The group says it has also been told that those who contracted-out of the state second pension or Serps will not receive the entire universal £140 per week from the state. Instead they will receive their contracted out pension which will be topped up by the state.

Around £100 will come from the basic state pension and then the additional pension will be added on to that, the firm says. If the amount is more than £140, the pensioner will receive that amount. If it is less, the pensioner will be topped up to £140. Only those with a full 30 year National Insurance record will qualify for the universal pension, the firm understands.

This follows predictions from senior industry figures that Government would seek to limit state benefits to those who had been contracted-out of S2P.

A DWP spokeswoman would not comment until the consultation process begins later this year.


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There are 9 comments at the moment, we would love to hear your opinion too.

  1. So anyone who stayed contracted in gets MORE than £140, so presumably the extra is the “reward” for having stayed in? (given that everyone will get £140?) So why would those who contracted out get LESS than £140 when those who did neither (v low paid) will presumably get £140, if everyone gets it…or am i missing the detail ?

  2. Let me guess how the new BSP will be funded. S2P and contracting out will be abolished but NICs will stay at the full rate for all employees. Medium and higher earners will lose their future S2P accrual (or rebate) which could be considerably more than the new higher BSP.

    Remember, the Government is proposing this to save money, not to improve state pensions.

    It’s a tax rise – not a good news story.

  3. and what about women who made additional contributions with the last year to overcome the gap created by the change from 40 years to 30 ?

    and what about those who have deferred taking their pension in order to build up a larger pension when they do retire ?

    I do hope that they have thought this thing thru.

  4. Does this mean…. that everyone who contracted out to get more will now get less than everyone who remained contracted in to get less will now get more?
    Does this also mean that everyone that contracted out can sue their financial adviser!

  5. Jim H. An excellent, adroit analysis, concluding with more litigation coming our way…

  6. Sounds like means testing to me.

  7. Great !!
    So, currently if I was contraced in and at SPA I would get the basic full state pension AND serps/ s2p on top. Under new rules I would NOT be penalised and be able to retain more than the £140 pw state pension.

    Currently for contracted out, I could get the full basic state pension AND the benefit from my protected rights pension plan on top. Under new rules they would take my protected rights income into account first and then the state simply pay me the difference between that and the £140 per week. So I could never have more than the basic guaranteed flat rate pension.

    This must be incorrect……as it stands it appears that everyone who contracted out will now loose the WHOLE benefit of contracting out in the first place. Contracting out was to replace SERPS / S2P – not to replace the basic state pension.

    Why are people who contracted out being penalised !!!!!

    What happens if the protected rights pension exceeds £140 per week? I assume that the individual gets no basic state pension at all.

    This is grossly unfair to those who contracted out – people who stayed contracted in get more than £140 but people who contracted out are capped at £140.

  8. Has Ros Altman herself really thought through all the impications? She gave the flat rate such a very wh’olehearted welcome on the day it was announced when it would surely have been more seemly for her to have held back a bit unitl all became clearer. The article here fails to answer the questions satisfactorily, as the comments show. Last year at a cost of not far off £900, for which I dug into my savings, I I bought three years of “missing” National Insurance to try to get nearer the 39 still then needed for a full state pension. (And by the way, the abrupt overnight reduction to only 30 years rather than phasing it in was very unfair on those women born before April 1950s). Was this as waste of money? Coudl I get a refund?
    In addition, I am among those deferring my pension by a year ie until mid-January. Would it be better to take the pensio immediately – ie get what i can while it is available? And if I do hold out unitl January, would it be better tot ake a lump sum and have the money in hand (though of course taxable like the pension) or would it be better to take increased pension. And will the deferred bit of the pension, and “bought” extra three NI years, be treated like basic state pension when it comes to annual pension increases?

  9. Made a mistake in my previous comment; cost of buying three years NI was not far off £1900 rather than £900, unfortunately!

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