If you think you may have contracted out of SERPS in the past, please go to our pension tracing service page. We will trace any contracted out contributions you may have made and let you know where this additional pension is located.
State Earnings Related Pension Scheme (SERPS), originally known as the State Earnings Related Pension Supplement, was a UK Government pension arrangement, to which employees and employers contributed between 6 April 1978 and 5 April 2002, when it was replaced by the State Second Pension.
Employees who paid full Class 1 National insurance contribution between 1978 and 2002 earned a SERPS pension. Members of occupational pension schemes could be "contracted out" of SERPS by their employer.
The purpose of the scheme was to provide a pension related to earnings, in addition to the basic state pension.
The principle was that everyone would receive a SERPS pension of 25 per cent of their earnings above a "lower earning limit". The scheme was phased in over twenty years so that those retiring before 1998 received a SERPS pension proportional to the number of years that they had made contributions to it.
When the scheme was established, employers with final-salary pension schemes could choose to contract-out of SERPS, provided they gave scheme members a Guaranteed Minimum Pension. In return for opting out of SERPS the employer would pay reduced National Insurance contributions.
In 1988 members of money purchase pension schemes were allowed to opt out for the first time. Instead of providing a Guaranteed Minimum Pension these schemes had to pay the saving in National Insurance contributions into the pension arrangement. To encourage the take-up of this arrangement the government made an extra incentive payment into each pension scheme where somebody contracted out using this route.