The additional State Pension, or State 2nd Pension, is paid in addition to the basic State Pension.

Until April 2002, the additional State Pension for employees was called the State Earnings-Related Pension Scheme (SERPS). The amount of SERPS pension you received was based on a combination of the amount of your National Insurance contributions, and how much you earned.

In April 2002, SERPS was reformed and the additional State Pension is now known as the State 2nd Pension, which gives a more generous additional State Pension to low and moderate earners, and certain carers and people with a long-term illness or disability.

Any SERPS entitlement you have is protected – so if you built up an entitlement to additional State Pension before April 2002 you will keep it, whether or not you’ve already reached State Pension age.

Spouse or civil partner inheritance of the additional pension

State 2nd Pension

A widow, widower or surviving civil partner can only inherit a maximum of 50 per cent of their spouse’s or civil partner’s State Second Pension.

SERPS

If you contributed to SERPS the maximum percentage of your SERPS pension that your widow, widower or surviving civil partner could inherit is on a sliding scale depending on when you were born and the age at which you retired.

The percentages range from 50 per cent for men born on or after 6 October 1945 or women born on or after 6 July 1950, up to 100 per cent for men born on or before 5 October 1937 or women born on or before 5 October 1942.

Contracting out – effect on additional State Pension

When you contract out you choose to pay a reduced amount of National Insurance contributions because you have joined an occupational pension scheme. As a result, you will not normally be entitled to the full State Second Pension because your additional pension will come from your employer’s scheme. But you will normally be entitled to a reduced additional State Pension.

When you contract out you choose to pay a reduced amount of National Insurance contributions because you have joined an occupational pension scheme. As a result, you will not normally be entitled to the full State Second Pension because your additional pension will come from your employer’s scheme. But you will normally be entitled to a reduced additional State Pension.If you have a stakeholder pension or a personal pension you can still contract out if you wish, but instead of you paying a reduced National Insurance contribution, HM Revenue & Customs (HMRC) will pay an annual rebate of contributions direct into your personal pension. If you choose not to contract out you will not receive this rebate, but you will still build up entitlement to the State 2nd Pension.

Source: DirectGov. Crown copyright.