The basis for calculating Serps is ?????

EnglishMohican

I have just received my pension award notice and am trying to understand the calculation, especially the Serps bit.

It is a new state pension but I get a value based on what I would have received under the old system. That includes the full basic state pension plus a little bit of Graduated Pension and a little bit of Serps.

Most of my life I was contracted out so quite understand that I do not get Serps for those years. However for a couple of years in the middle, I was contracted in. I am trying to understand how HMRC treat those years. For arguments sake, lets say I was contracted in for 1980 and 1981 and in those two years I paid into Serps. I believe that would be an amount based on my Salary, so it would be possible to calculate that in each of those years I paid an extra £100 (lets say) to the state that I would not have paid if I had been contracted out.

Did those £100 buy me an entitlement to (£100 uprated by some percentage to allow for interest/inflation) that should be included in my pension now or is the concept different.

There is some indication that the concept is different as I have an old statement that says the Serps bit is worth £6.74 per week but the amount included in my pension award must be less than that (how much is not stated, but the final amount minus the basic pension is too small to include that amount). So it appears that the Serps payment can go down as well as up with inflation etc.

Comments/Explanations/Guidance welcome.

xylophone

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/447195/new-state-pension--effect-of-being-contracted-out.pdf

The figures are a little out - BSP is £119.30. Full NSP is £155.65.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/512799/your-state-pension-statement-explained-dwp042.pdf