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.