S2P and Incapacity Benefit

seven-day-weekend

My husband has been on long-term Incapacity Benefit since 2004. The below article seems to say that people like him can be building up some S2P (SERPS).

He has worked since 1964 when he was 15, until 2004 when he was 55, with a few years out for university (September 1979 to September 1983). He is already drawing his Teachers' Pension.

Is this ruling relevant to him and how does it work?

Thanks in advance.


http://www.scottishlife.co.uk/scotlife/Web/Site/Adviser/TechnicalCentralArea/InformationGuidance/General/TheStateSecondPensionExplainedPage.asp

State Second Pension (S2P)

Introduced by the Child Support, Pensions and Social Security Act 2000 S2P is the successor to SERPS and was effective from 6 April 2002. As well as providing an additional state pension for the employed, S2P for the first time gives an additional state pension based on earnings of £13,000 to:

• those with earnings above £4,524 but below £13,000
• carers with no earnings or earnings below £4,524 for any year that they;
  • receive child benefit for a child under six, or
  • are looking after an ill or disabled person in circumstances which qualify for Home Responsibilities Protection, or
  • have an entitlement to Invalid Care Allowance (even if the benefit is not claimed because of entitlement to another greater benefit)
• those who are entitled to long term incapacity benefit or severe disablement allowance, provided that they have worked for and paid Class 1 NI contributions for at least one tenth of their working life since 6 April 1978.
• S2P is not available to those earning less than £4,524, the unemployed, students, those caring for children older than six and the self-employed

dunstonh

The teachers pension is contracted out of SERPS. So, he would never have built up an entitlement with the state. The benefit it built up within the occupational pension.

seven-day-weekend

But he is still building up his State Pension (he is only 58 and not drawing it yet). IB credit him with contributions. So I thought that he could build up S2P as well through this, from the time he stopped paying into the Teachers' Pension. Is that not correct?

Milarky

dunstonh wrote: »

The teachers pension is contracted out of SERPS. So, he would never have built up an entitlement with the state. The benefit it built up within the occupational pension.

As maybe. But the S2P is built up as a 'credit' during the period of incapacity benefit payment also - which is between 2004 (55) and 2014 (65). In other words he will receive additional state pension (to the basic) for the years he is on IB.

(A bit of a shocker about 'child under six' though - that means that women can build up basic/S2P from first born until youngest is six but then only get basic pension entitlement for the remainder of the 20 years HRP is designed to cover. The gov't isn't naive enough to think that mums understand they must 'seek work' once their children have started school are they? But there they go - giving a loaf in one hand and taking half of it back stealthily with the other)

seven-day-weekend

So MIlarky, are you telling me that from 2004 and continuing for as long as he is on IB, he ill receive entitlement to S2P?

Will the fact that he only now needs 30 years for his basic State Pension (and already has 36) make a difference?

That will be good if he gets a bit extra. Hey, he'll be pleased!

(Just realised it will benefit my son as well, who earns under £13000).:D

:beer:

Unfortunately, all my low-earnings work was done in the 80s and early 90s. However, I did get HRP for it, so I've benefitted by not having to pay in for so many years (I'm still on the 39 year rule).

So, good news for our family!

EdInvestor

He will be entitled, but I doubt that it will be much frankly.

seven-day-weekend

Every little helps!

How much? A tenner? That's all we were expecting.

seven-day-weekend

Thanks everyone for your helpful replies.

Milarky

Over 10 years he will gain about 10/49ths of the flat rate of S2P

Currently that's worth about £69 annual pension per year. To a first approximation this is the same amount each year and is in 'earnings-equivalent' terms - so that 'in today's earnings' this would add about £690 pa to a current state pension of £4524. For the next five years the basic pension will only be indexed to prices rather than incomes - so it will 'fall' relative to earnings between now and 2012. By 2014 the current basic old age pension will have fallen 10% relative to earnings - but not the S2P.

So I'm guessing the S2P will rise about 10% in 'real' (price) terms by an equal proportion - 10 percent and be worth about £75 per year times ten years and that would add about one sixth the basic old age pension.

seven-day-weekend

£75 a year?

Not to be sneezed at! It will pay the tax on his motorbike.

Thanks for doing the number-crunching.