How is S2P calculated?

S2P – the benefit calculation The revalued earnings at state pension age in each band are then multiplied by the accrual rate applicable to that band. These revalued earnings are divided by the total number of years in the individual ‘s working life since 1978 to give the S2P benefit.

What is the difference between SERPS and S2P?

If you were paying into the additional state pension from 1978 to 2002, it was called state earnings-related pension scheme (Serps). If you were paying in after 2002, it was called the state second pension (S2P).

Does S2P exist?

The State Second Pension (S2P), or Additional State Pension, was introduced in the UK by the Labour Government on 6 April 2002, to replace the SERPS (State Earnings-Related Pension Scheme). The Additional State Pension was replaced for new pensioners by the new State Pension on 6 April 2016.

Who paid into SERPS?

To be eligible for SERPS, you had to be employed and paying Class 1 National Insurance contributions (it wasn’t available to the self-employed). Contracting out essentially meant that some of your NI contributions would be re-directed to an alternative pension plan, known as a ‘protected rights pension’.

Why are there different bands of accrual for S2P?

S2P is based on an earnings-related system similar to SERPS but with different accrual rates. The Government ‘s aim was to ensure that low and non-earners received a greater benefit from S2P. To achieve this there were originally three bands of accrual. The three bands of accrual were:

What’s the income limit for a s2p state pension?

As well as providing an additional state pension for the employed, S2P gives an additional state pension based on earnings of £15,300 (2015/16) to: employed and earning over the lower earnings limit of £5,824 in the 2015 to 2016 tax year caring for a sick or disabled person more than 20 hours a week and claiming Carer’s Credit

What’s the difference between SERPs and S2P pensions?

At the “3 x LET – 2 x LEL” threshold (£32,592 a year) SERPS and S2P pensions are equal and the same rate of accrual (20 per cent) applies above that. These percentages are the entitlement of employees who have contributed to the scheme for a full working life. This is defined as the number of years between age 16 and State Pension Age.

What is the s2p benefit for 2014 / 15 tax year?

Total S2P benefit for 2014/15 tax year is £112.80. Note – In both examples the S2P benefit would be converted into a weekly amount. SERPS and S2P will be calculated separately and individuals will be entitled to both a SERPS and a S2P benefit at state pension age, assuming of course that they were in both SERPS and S2P.