I have been told that the Government might compensate pensioners or
prospective pensioners over Serps. What is this about and do I qualify for
Well, as a female – namely, a potential widow – you are more likely to be
affected and qualify than a man.
For both the basic state pension and Serps, there are two types of pension
– category A, based upon your own contributions, or category B, based upon
your spouse's contributions.
In addition, a composite pension of category A and B may be paid to a
widow up to the maximum that a single person can receive.
Under the Social Security Act 1986, the Conservative Government halved the
category B pension payable to a widow or widower in respect of their
spouse's Serps pension from 100 per cent.
This was to take effect from April 6, 2000. If the claimant had already
been widowed by this date, the legislation would have no impact.
For reasons that are not clear, the Department of Social Security did not
bother to update its explanatory leaflets or tell its staff about this
change. As a consequence, many members of the public who contacted the DSS
were misled. Therefore, those who might have been able to take action to
improve their surviving spouse's pension might have decided to take no
Of course, this is hypothetical as they may not have been able to afford
to take action or may have chosen to do nothing when confronted with the
Men are less affected as they have less to lose. Until the Social Security
Act 1986, men did not receive a widower's Serps pension and, thereafter,
they were only eligible if they were over 65 when their wife died and she
was over 60.
In addition, the widower may elect for a composite category A and B
pension. But, as the maximum basic pension cannot be more than that for a
single person, most men will not benefit.
The Serps' pension paid to a widower is capped at the maximum payable to a
single person at the time of his wife's death, that is, the pension paid to
a single person who had been paid above the upper earnings limit from the
beginning of Serps. Only a small number of men may benefit from this.
For many women with only very limited Serps and basic pension rights, the
loss of 50 per cent of the Serps' pension payable to their husband is much
The Labour Government has announced two measures. First, the cut in Serps
will be delayed until October 2002. Its advertisements and press release
did not make this date clear but a Parliamentary statement confirmed that
the cut will take place from October 6, 2002.
Second, those who can show that they were misled can claim redress in the
form of an inherited Serps' scheme.
The phased cut in Serps' accrual rates from 25 to 20 per cent of banded
earnings – lower earnings limit to upper earnings limit – in each year is
not affected and this will be complete by 2010.
The reduction in Serps will continue as the working life of the retired
person continues to increase until 2027.
Interestingly, from April 6, 2010, many of the pension benefits currently
payable only to women will also be payable to men. As a result, some
complex interactions could arise.
It is not yet clear how you will have to prove that you were misled by the
proposals to halve widows' Serps pensions. It may be as little as a signed
disposition, in the same way as a prosecution for perjury is threatened for
Of course, if you were not affected by the change – say, by being divorced
– you cannot claim. More information on how to claim will be published
later this year but for now you can register by ringing 0845 600 6116.
I would suggest that the Government needs to adopt the same standards it
required for the private sector in the pension misselling review.
Long-term television advertising should highlight the offer of redress
using the Government's “R U Owed?” phrase. This should be repeated at least
three times – during the launch of the redress scheme, after a year or so
and approximately six months before the deadline.
The Government should also write to all those likely to be affected
explaining their rights to compensation and requesting that they make a
claim. If a response is not received within, say, three to six months, the
Government should write a reminder to all those that have not replied, as
the private sector had to in the misselling review.
In addition, the Government should make further resources available to the
Citizens Advice Bureaux to help members of the public make their claims.
The number of advisers may need to be increased due to a very large number
of people affected by these changes.
Lastly, the guidelines for assessing claims should be published for
wide-ranging consultation within the community. Before being approved, the
guidelines should be agreed by the ombudsman.