What was SERPS and where did my pension contributions go to?

QrizB

Ocelot said:

..  so everyone was paying more NI for no additional gain.

Except that from 2016 a year's NI bought you 1/35th of the new state pension, not 1/30th of the old one.
At current rates, that's £6.32 a week rather than £5.65. About 12% more.

michaels

QrizB said:

Ocelot said:

..  so everyone was paying more NI for no additional gain.

Except that from 2016 a year's NI bought you 1/35th of the new state pension, not 1/30th of the old one.
At current rates, that's £6.32 a week rather than £5.65. About 12% more.

So again a win for those who had contracted out and were thus still able to take advantage of the higher accrual rates and a bigger loss for those who were getting no more pension for their NI.

michaels

Ocelot said:

AIUI, if you contracted out you paid less NI and the difference went into an occupational scheme.

If you didn't contract out, after 2016 your accrued SERPS were frozen but not lost.

In 2016 contracting out was abolished for DC pensions, so all subsequent NI was at the same rate, whether previously contracted out or not, but the additional NI paid after this year was no longer going into a second pension, so everyone was paying more NI for no additional gain.

Sadly serps wasn't frozen which would have been fair but instead was folded into the new state pension so for all intents and purposes lost.

Linton

Ocelot said:

AIUI, if you contracted out you paid less NI and the difference went into an occupational scheme.

If you didn't contract out, after 2016 your accrued SERPS were frozen but not lost.

In 2016 contracting out was abolished for DC pensions, so all subsequent NI was at the same rate, whether previously contracted out or not, but the additional NI paid after this year was no longer going into a second pension, so everyone was paying more NI for no additional gain.

Some clarification....

1)  There is no connection between the amount you would have paid into SERPS and the amount paid into your DB pension.  You simply benefited from paying less NI.

2) In 2016, if you would have accrued more under the new rules you would get that and the SERPS would be irrelevent, If the old rules provided the higher pension the accrued SP was merged into the core pension up to the Standard level.  You kept any SERPS left beyond that as "Additional Pension".

3) In 2016 all contracting-out was abolished.  The SERPS component of NI was merged into the total and effectively paid for the rise in SP from Basic to Standard.