Examples of how low earners can be helped by the State Second Pension

Margaret works part time in a supermarket. She earns £7,500 a year. This doesn’t leave her enough spare cash to save for a private pension. Under the State Second Pension rules, we will treat Margaret as though she had earnings of £11,600 a year (at 2004/05), and her additional pension will build up at a faster rate. This means that she will build up an additional pension which is more than twice as much as she would have got from SERPS.

Sajda is taking a total of eight complete tax years out of paid employment so that she can care for her two children before they start primary school. Under State Second Pension rules, she will build up an additional pension as if she had earned around £11,600 a year (at 2004/05)for each of those eight years. Sajda has an elderly mother and, in future, she may have to take more time out of paid employment so that she can care for her. If she later claims Carer’s Allowance or Home Responsibilities Protection because she is caring for her mother, she will continue to build up an additional pension in the same way.