1.3.2 State Earnings Related Pension Scheme
- When the scheme started in 1978, the aim was to provide
an additional 25% retirement income, based on the best 20
years earnings, revalued in line with inflation.
- In 1986, however, the basis was reduced to 20% of average
career earnings, revalued in line with inflation; a significant
reduction.
- People retiring up to tax year 1998/9 will have their earnings
related entitlement calculated as 1¼% of each year's
revalued earnings (maximum 20 years, equivalent to 25%).
- Those retiring between 2000 and 2010 will be subject to
a transition from the old scale to the new.
- Those retiring after tax year 2009/10 will have SERPS entitlement
reduced to 20% of revalued earnings.
- Not all earnings count towards the SERPS calculation, but
only 'middle band' earnings between the Lower Earnings Level
and the Upper Earnings Level.
- SERPS has now been replaced with a new second tier pension,
the State Second Pension (S2P).
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