Compulsory serps

snugasabugxxx

20 years ago when I started my current job I decided against paying into the work pension.
Later it became compulsory by law to have  work pension but I could opt out if I payed serps, so I paid the serps.
Then the serps stopped.
I'm getting my state pension in a few months time
But what happened to those serps payments that I was forced to pay but have afforded me no benefit?  It was money taken from me with a promise that was not fulfilled.
It feels like money stolen from me

sammyjammy

Its not compulsory to have a work pension, its compulsory for an employer to offer one if certain circumstances are met.

You paid into SERPS as part of paying National Insurance, why do you think you won't reap the rewards of that when you claim your state pension?  Just because the scheme stopped it doesn't mean those additional contributions won't be factored into your pension payable amount, it will.

molerat

SERPS gave you access to the additional state pension, an additional amount over and above the basic pre 2016 pension - the basic is currently £176.45 and additional pension could add up to another £222.10 on top.  That was accounted for in the starting mount going into the new pension and could in some cases give you in excess of the maximum new pension.  It was not lost but could limit your further accrual.

Linton

snugasabugxxx said:

20 years ago when I started my current job I decided against paying into the work pension.
Later it became compulsory by law to have  work pension but I could opt out if I payed serps, so I paid the serps.
Then the serps stopped.
I'm getting my state pension in a few months time
But what happened to those serps payments that I was forced to pay but have afforded me no benefit?  It was money taken from me with a promise that was not fulfilled.
It feels like money stolen from me

With SERPS you accrued more SP than if you were contracted out.  Exactly how that affects your final SP depends on your exact circumstances. But broadly people with a high pre-2016 SERPS value could have a significantly higher SP on retirement than the current standard rate, people who were contracted out for most of their working lives could have significantly less.

QrizB

Just as an aside:

snugasabugxxx said:

20 years ago when I started my current job I decided against paying into the work pension.

Employer pension contributions were part of your contractual benefits.

By choosing not to join the scheme, you have effectively taken a voluntary pay cut.

DRS1

snugasabugxxx said:

20 years ago when I started my current job I decided against paying into the work pension.
Later it became compulsory by law to have  work pension but I could opt out if I payed serps, so I paid the serps.
Then the serps stopped.
I'm getting my state pension in a few months time
But what happened to those serps payments that I was forced to pay but have afforded me no benefit?  It was money taken from me with a promise that was not fulfilled.
It feels like money stolen from me

So are you saying your state pension is going to be no higher than the new state pension (230.25 pw for this tax year)?

Have you checked your state pension forecast to see if you can increase your pension?

hyubh

snugasabugxxx said:

20 years ago when I started my current job I decided against paying into the work pension.
Later it became compulsory by law to have  work pension but I could opt out if I payed serps, so I paid the serps.
Then the serps stopped.
I'm getting my state pension in a few months time
But what happened to those serps payments that I was forced to pay but have afforded me no benefit?  It was money taken from me with a promise that was not fulfilled.
It feels like money stolen from me

I think you need to double check the facts of your situation.

• 40 years ago it was possible for membership of a contributory work pension to be a condition of employment; this however was outlawed in 1988.
• Also in 1988, it became possible to 'contract out' of SERPS not only through a work pension, but into a personal pension. Here you had a 'rebate' of some your NI contributions to invest.
• 20 years ago = 2005. However SERPS had ended in 2002, being replaced by S2P. Maybe that sounds pedantic, like saying you had a Ford Escort 20 years ago when you actually had a Ford Focus, but they are still different.
• Nevertheless, the possibility of 'contracting out' into a personal pension remained with S2P, only being abolished a decade later in 2012.
• Also in 2012, pensions auto-enrolment was introduced. However, this did not make legal again compulsory membership of an occupational scheme, rather it made some sort of occupational scheme compulsory for employers.

I'm wondering whether by 'SERPS payments', you really mean contracted-in NICs (which were giving you a higher state pension under the old system) or S2P rebates (which went into a personal pension)...?

af1963

The details may not be clear but it's quite possible that snugasabugxxx did indeed pay a lot of NI contributions for no benefit.

If he or she started with a pension figure that was already above the maximum new state pension in 2016, or reached the maximum new state pension later but with some years still to work, then all their NI payments from that point onwards generated no extra pension.

People like this - often those who found they needed fewer than 35 years to get a full pension - are the losers from the new post-2016 pension system.

Dazed_and_C0nfused

af1963 said:

The details may not be clear but it's quite possible that snugasabugxxx did indeed pay a lot of NI contributions for no benefit.

If he or she started with a pension figure that was already above the maximum new state pension in 2016, or reached the maximum new state pension later but with some years still to work, then all their NI payments from that point onwards generated no extra pension.

People like this - often those who found they needed fewer than 35 years to get a full pension - are the losers from the new post-2016 pension system.

But if they end up with a bit more than the standard £230.25 they often seem to think of themselves as winners.

Whilst plenty of the real winners who benefitted from paying reduced NI for many years and then had time to add post 2016 years see themselves as losers 🤷‍♂️

Silvertabby

Dazed_and_C0nfused said:

af1963 said:

The details may not be clear but it's quite possible that snugasabugxxx did indeed pay a lot of NI contributions for no benefit.

If he or she started with a pension figure that was already above the maximum new state pension in 2016, or reached the maximum new state pension later but with some years still to work, then all their NI payments from that point onwards generated no extra pension.

People like this - often those who found they needed fewer than 35 years to get a full pension - are the losers from the new post-2016 pension system.

But if they end up with a bit more than the standard £230.25 they often seem to think of themselves as winners.

Whilst plenty of the real winners who benefitted from paying reduced NI for many years and then had time to add post 2016 years see themselves as losers 🤷‍♂️

Exactly.  I have the maximum possible amount of contracted out service (38 years) but had enough time between 2016 and SPA to be able to top my State pension up to the full nSP.  Even after paying 4 years of voluntary Class 3s I consider myself to be a real winner under the new pension scheme.

But I have a friend with a very similar history to me who receives less than the full nSP and who is adamant that she has been diddled.  Pay the 4 years she needed to get the full pension?  Absolutely not - a lump sum of £3K for an additional State pension of 'just' £20 per week was a very poor return.  And she had paid enough tax and NI in her time, and wasn't going to pay a penny more than she had to.  

Yes, I did point out that £20 a week = £1K per year.....

Marcon

snugasabugxxx said:

20 years ago when I started my current job I decided against paying into the work pension.
Later it became compulsory by law to have  work pension but I could opt out if I payed serps, so I paid the serps.
Then the serps stopped.
I'm getting my state pension in a few months time
But what happened to those serps payments that I was forced to pay but have afforded me no benefit?  It was money taken from me with a promise that was not fulfilled.
It feels like money stolen from me

I'm not sure anyone has picked up on your last points.

At the time you joined your employer in around 2005, the state pension came in two 'parts': the basic state pension, plus the Additional State Pension (known as SERPS until 2002, and then the State Second Pension).

Your employer offered you membership of their pension scheme which was 'contracted out' of the Additional State Pension. Had you joined the scheme, three things would have happened while the scheme remained contracted out. You would have:

• had the benefit of tax relief at your marginal (highest) rate on any personal contributions you made
• had the benefit of employer pension contributions
• paid a lower rate of National Insurance, thus boosting your take home pay.

You chose not to join. The employer therefore had no choice but to deduct the full rate of NI from your pay. Either:

• you would have built up more state pension than your colleagues who were in the pension scheme during that time. Everyone would have built up their entitlement to the basic state pension, but you would have had 'extra' from the  Additional State Pension. Your colleagues would not, for the simple reason they were paying lower NI and getting benefits from the employer's scheme; or
• (until 2012) part of your full rate NI would have been paid over to a personal pension, if you had set one up to receive these but didn't actually make payments to the personal pension yourself. The jargon is 'appropriate personal pension funded on a rebate only basis' - doesn't exactly trip off the tongue, but does it ring any bells?

I'm not sure what promise has 'not been fulfilled' or why you feel the money has been stolen. The changes to the state pension system which took effect from 2016* weren't known 20 years ago, and information given to you 20 years ago, whatever the source, would have reflected the position as it then stood. 

I'm afraid your real loss stemmed from your decision not to join your employer's scheme. Was that your own decision, or did you take the decision based on advice given to you by a third party - such as someone flogging you a personal pension as a 'better bet'?

*beautifully explained by @p00hsticks  in their post of 21 November 2025 at 3.53 pm https://forums.moneysavingexpert.com/discussion/6641527/pre#latest