Second pension options and how they work

Additional State Pension (SERPS)

If you are an employee, you may be able to build up an additional State Pension on top of the basic State Pension. Up to April 2002, the additional State Pension was called the State Earnings-Related Pension Scheme (SERPS). SERPS was based on your record of National Insurance contributions and your level of earnings as an employee.

SERPS may be inherited by a surviving husband or wife.

Changes to reduce the maximum amount of SERPS that a widow or widower may inherit from their husband or wife have been introduced. How much someone will be able to inherit will depend on their circumstances.

For more information, please see Inheritance of SERPS – Important information for married people (SERPSL1). Click here for details about how you can get a copy of this leaflet.

State Second Pension

On 6 April 2002, the Government reformed SERPS, creating the State Second Pension to provide a more generous additional State Pension for employees on low or moderate earnings, and certain carers and people with long-term illness or disability. For State Second Pension purposes, earnings up to £11,600 are low earnings and earnings between £11,600 and £26,600 are moderate earnings (for 2004/05). Only earnings on which standard-rate Class 1 National Insurance contributions are paid, or treated as paid, count. (Any SERPS entitlement that has already been built up will be protected both for those who have already retired and for those who have not yet reached State Pension age.) State Second Pension may be inherited by a surviving husband or wife. The maximum amount that a surviving husband or wife can inherit is 50%.