Want To Release Money From Your SERPS Pension? Or Need Advice On Your SERPS Pension, Hilltop Finance Can Help

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What exactly is SERPS Pension?

SERPS is an abbreviation for the State Earnings Related Pension Scheme. It is sometimes referred to as the Additional State Pension.  It is a pension scheme operated by the government, which ceased running on the 5th April 2002. It has now been replaced by the State Second Pension.

You may have a SERPS entitlement if you made a Class 1 National Insurance Contributions (NICs) at any time between 1978 and 2002.  SERPS was specially introduced to increase the amount that would be paid to retirees above basic state pension.

How Much Money Will Be In My SERPS Pension?

Most pensioners are finding the fund size to be around £30k and in some cases even higher! Thus, it is really worth finding your serps pension and ensuring it is performing as it should be.  There are over 15 million people who contracted out of SERPS. Research shows that most of them may have a significant pension fund in some cases in excesses of £30k!

It is important to note that when most people contracted out, their funds were redirected into a private pension fund set up in their own names.  There were more than 100 pension companies that were able to accept these contributions at the time. However, many of these companies have merged and others have been taken over and tracing your funds can be difficult.

If you have lost touch with your SERP pension pot, we can help you find your lost funds and help you to utilise them. our professionals will go back many years and trace your pension provider. It may be surprising to find out that funds you thought may be only small could have grown to a significant amount. Contact us today to learn more about how we can help.

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How Do I Know if I opted / contracted out of SERPS?

You could only “Opt Out Of SERPS" / “Contract Out OF SERPS” if your employer ran a contracted out workplace pension scheme. If you were a member of a contracted out workplace pension you did not contribute to the SERPS. 

It is important to note that you could not contract out after 6th April 2016. If you were contracted out, your National Insurance Contributions should have increased to your standard rate after this time.  The extra pension you get from a contracted out workplace pension scheme is similar or more than the additional state pension you would have received if you had not contracted out.

You can find if you were contracted out Of SERPS / Opted Out Of SERPS by:
  • Calling your pension provider
  • Checking an old payslip
  • Checking with your employer

We can assist you in finding your pension provider’s contact details and carry out a review on how your pension has performed. 

What Happened If I Was Contracted Out From My SERP?

According to The Guardian, up to 15 million people were contracted out of SERPS between 1978 and 2002. People were allowed to opt out of their SERPS and put their accrued funds in the Company Final Salary Scheme or a Personal Pension.

Most of the people who contracted out did so since they wanted their funds to go directly to a private pension scheme rather than contribute to the National Insurance kitty. However, the original promotions at the time that one would contribute less for National Insurance and get better benefits and generally be financially better off has since been provided to be questionable.

So, Where Is My Money Now?

 If you contracted out of your SERPS pension, then you would have invested the money in either a Personal Pension or a Company Final Salary Scheme. It may state that this type of pension has protected rights but this was abolished in 2012. This means this amount is accessible for pension release.

Since your SERP funds were put into other pension schemes when you contracted out, it will therefore just constitute your retirement savings.  This is where pension release comes in. With pension release, you are allowed to withdraw money from your private pension and most company pensions from the age of 55.

However, this does not mean you can withdraw money from a company final salary pension; you have to use a different route. For example, you may be required to first transfer your retirement savings to a private pension that provides Pension release. Note that by transferring your money from a final salary pension account, you will lose some specific benefits that are only available with Final Salary Pensions. Make sure you speak to a financial advisor before making this decision.

Pension Release Advice

We offer pension advice to UK residents who are thinking of retirement planning, we firstly assist you by finding out more about your current situation before recommending to you the most appropriate solution for your circumstances by our team of trained advisors who have up to date in depth market knowledge.

Benefits Of Pension Release Advice
Straight Forward Advice
Track Down Your Pension
In Depth Market Knowledge
Make sure your pension is performing
What Was the Purpose of SERPS?

The primary goal of introducing the SERP Pension Scheme was to supplement the basic state pension by offering retirees a pension that was relative to their accrued earning during that specific period of time. SERPS were founded under the principle that all workers would get a SERPS pension of 25% of their accrued earnings. This 25% would be above a ‘lower earnings limit’, that would be approximate to the basic state pension’s amount.

How Do I Know I Was a Part of the SERPS Schemes?

If you earned enough money and paid worker’s National Insurance Contributions (NIC), its highly likely you was part of the SERPS. This is what is called” Contracting In”. SERPS was related to the gains and thus the sum pensioners should get at state pension age will change. Thus, if you contracted out of SERPS using a workplace pension plan or a private pension plan, the government paid part of your National Insurance Contribution annually in this kind of a rebate. 

What Was “Contracting Out”?

The pension scheme was designed to “top” up your basic State Pension entitlement. But some people chose to opt out of this scheme; this is what is commonly called “contracting out”.

When SERPS was introduced, employers with established final salary pensions were allowed to choose whether to contract out of the SERPs. Employers were allowed to contract out of the scheme if members were granted a “Guaranteed Minimum Pension”. Employers who opted out of the SERPs would pay less into the National Insurance Contributions.

For the first time, 1988, constituents of pension schemes were allowed to contract out. Instead of being obliged to provide a Guaranteed Minimum Pension, they were allowed to pay savings of National Insurance Contributions into a pension plan. To incentivize the arrangement, the government introduced an additional payment into the pension scheme of every instance where the SERPS were contracted out in this fashion

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Hilltop Finance understands that pensions can be confusing. That is why our friendly advisors are on hand to help you understand your pension better and ensure its performing the best it can.

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