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Standard says S2P is &#39great Government giveaway&#39

Standard Life is calling the new state second pension the Great Government Giveaway, saying its terms are so generous it is a bonanza for “doctors&#39 wives”.

The loophole enabling professionals to claim a pension for their spouse was available under Serps but benefits would only amount to a few hundred pounds. S2P bumps up those benefits by thousands of pounds.

Under the new S2P being introduced on April 6, spouses employed on minimal wages will be able to claim a substantial state top-up pension without having to pay taxes or National Insurance. Anyone earning up to £3,900 can claim an S2P pension on earnings of £10,800.

As people earning less than £4,500 do not pay tax or NI contributions, Standard Life says this means that a very generous state pension can effectively be claimed for free. The same person would also be entitled to pay up to £3,600 in to a stakeholder plan and receive tax relief of £792.

S2P is intended to help people on low incomes. But Standard says those who are set to make huge gains from S2P are the wealthy, the same group it says is taking out stakeholder.

Senior technical manager John Lawson says: “People can employ their spouse in a minor role and they could qualify for a free state top-up pension without ever paying tax themselves. This is a great Government giveaway. The Government is missing its target market for stakeholder and it looks as if it is about to make the same mistake with state pensions.”

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