BIFA - What is the State Second Pension (S2P) all about?
The State Earnings Related Pension Schemes (SERPS) was replaced with the State Second Pension (S2P) in April 2002. This change was intended to give low earners a much better state pension than SERPS provided.
However the ability to cotract out of the State Second Pension (S2P) will be withdrawn from 6th April 2012 meaning that everone who was eligible will be in effect contracted back into the state system. Existing benefits will not be changed. At the moment there are some limitations on how you can use your contracted out payments when you retire. From 6 April 2012 these limitations will be removed and all money will be treated with the same flexibility as a personal pension. There will no longer be a requirement to provide an income for a spouse or civil partner in the event of death.
The State Second Pension (S2P) was, for the first time available to certain carers and people with long term illnesses or disabilities i.e. people who’s working lives have been interrupted or shortened. Any SERPS entitlement that has already been built up is protected both for those who have already retired and for those who have not yet reached state pension age. The earnings related part of the state pension is not available to the self-employed.
The State Second Pension works in a similar way to SERPS with increased state pension benefits for lower earners. The benefits from SERPS were based on the amount of earnings on which National Insurance was paid, at a flat rate of 20%.
Overall the new scheme provides far better benefits for lower earners without reducing the benefits for higher earners.
The State pension age when the benefits are payable is:
* 65 for men
* 60 for women born on or before 5th April 1950
* 65 for women born on or after 6th April 1955
