Opting out of serps

molerat

Wolfy197216 said:

molerat said:

Those who were not contracted out and retired prior to 2016 could receive up to £398.55 per week, £176.45 basic and up to £222.10 additional pension.

But from 2016 didn't they scrap the second pension and just make it into the one pension which we know now.

If you had already earned it you kept it, you were given the better of the two calculations at April 2016, so there are people retiring now with more than the new full pension amount.  But you couldn't add to that amount post 2016 so there are some that had already hit the max prior to the 2016 change and then work another 15+ years paying NI for no gain on their state pension.

GunJack

Yes, but if you had built up more than the 2016 initial amount (the difference between your individually calculated starting amount and the "new" SP maximum, called a protected payment) then you kept that, but that extra does not go up by the triple lock like the main part, but at a lower rate.

Silvertabby

Wolfy197216 said:

molerat said:

Those who were not contracted out and retired prior to 2016 could receive up to £398.55 per week, £176.45 basic and up to £222.10 additional pension.

But from 2016 didn't they scrap the second pension and just make it into the one pension which we know now.

They stopped further accruals, but the amount of SERPS/SP2 over the new single tier rate became a 'protected payment'.  Medium/high earners who were contributing to SP2 - and who had some years between 2016 and SPA - are the losers under the new pension scheme.  Yes, their State pension may be higher than the nSP, but if the rules hadn't changed in 2016 they would have carried on accruing SP2, and so could have racked up over £300 per week.

And any 'protected payment' amounts only increase by CPI, not the triple lock.

TadleyBaggie

I started getting my SP in 2018, I currently get around £250 pw so assume I was in SERPS/SSP at some time

Silvertabby

TadleyBaggie said:

I started getting my SP in 2018, I currently get around £250 pw so assume I was in SERPS/SSP at some time

Yes.  With, at the most, 2 years between 2016 and SPA your loss is minimal.  

Albermarle

WitsEnd101 said:

So, are the people who didn't opt out now kicking themselves or do they get additional SP to compensate?

I was opted out for about 25 years I think.

My current position is that I get a state pension that is a little bit above the standard, but I have a DC pot that was funded solely from the diverted NI of just less than £200K. The actual NI paid into the pension was £28K , so the rest is investment growth over the years.
However if I had not had opted out, my state pension would have been significantly higher .

I tried to work out once whether I was better off or not, but as you can from some previous posts, it is not that simple. My conclusion was that it was a bit 50:50 .

Wolfy197216

Albermarle said:

WitsEnd101 said:

So, are the people who didn't opt out now kicking themselves or do they get additional SP to compensate?

I was opted out for about 25 years I think.

My current position is that I get a state pension that is a little bit above the standard, but I have a DC pot that was funded solely from the diverted NI of just less than £200K. The actual NI paid into the pension was £28K , so the rest is investment growth over the years.
However if I had not had opted out, my state pension would have been significantly higher .

I tried to work out once whether I was better off or not, but as you can from some previous posts, it is not that simple. My conclusion was that it was a bit 50:50 .

Thats an impressive growth Albermarle, which company is that with?. mine is with royal london and mine is only going from 21 to around 60k (estimated at retirement) but it gives me the option to move to another company 

Silvertabby

Albermarle said:

WitsEnd101 said:

So, are the people who didn't opt out now kicking themselves or do they get additional SP to compensate?

I was opted out for about 25 years I think.

My current position is that I get a state pension that is a little bit above the standard, but I have a DC pot that was funded solely from the diverted NI of just less than £200K. The actual NI paid into the pension was £28K , so the rest is investment growth over the years.
However if I had not had opted out, my state pension would have been significantly higher .

I tried to work out once whether I was better off or not, but as you can from some previous posts, it is not that simple. My conclusion was that it was a bit 50:50 .

Everyone is different.  I had the maximum possible contracted (not opted) out service between 1978 and 2016, but enough time between 2016 and SPA to be able to add to my State pension, including buying 4 years of voluntary Class 3s.  I, and others like me, are very much the winners under the new pension scheme - Public Sector DB pensions plus the full new State pension.  

alri08

WitsEnd101 said:

So, are the people who didn't opt out now kicking themselves or do they get additional SP to compensate?

I'm not kicking myself, I made the best decision I could with the information I had at the time. That's all anyone can do. Nobody can predict the future, certainly not pension rules changes to be enacted by a government 20 years in the future.

Albermarle

Wolfy197216 said:

Albermarle said:

WitsEnd101 said:

So, are the people who didn't opt out now kicking themselves or do they get additional SP to compensate?

I was opted out for about 25 years I think.

My current position is that I get a state pension that is a little bit above the standard, but I have a DC pot that was funded solely from the diverted NI of just less than £200K. The actual NI paid into the pension was £28K , so the rest is investment growth over the years.
However if I had not had opted out, my state pension would have been significantly higher .

I tried to work out once whether I was better off or not, but as you can from some previous posts, it is not that simple. My conclusion was that it was a bit 50:50 .

Thats an impressive growth Albermarle, which company is that with?. mine is with royal london and mine is only going from 21 to around 60k (estimated at retirement) but it gives me the option to move to another company 

The pension provider is not relevant to the performance. It all depends on what investments you have in the pension.
Without really knowing what I was doing at the time, I picked three 100% equity funds. US/Europe/Far East.
100% equity funds tend to grow well in the long term, albeit with a few big bumps in the road.
The pension was started around 1986, so has had a long time to grow. Plus there has been over 200% inflation in the meantime and it grew a lot in 2025.

Interestingly when I later started to take more interest in investments a few years ago, I decided to derisk the investments somewhat, thinking in fact the US market in particular was a bit frothy ( a bit like today) . It was a bad decision, and if I had not done it the pot would have been bigger still. Hindsight is a great thing.