Compare and apply
Stakeholder Pension Over 50's Plan Simple Protection Young Savers Plan Stocks and Share ISA Junior ISA University Savings State Pension InfoAdditional State Pension
The additional State Pension is a top-up of the standard State Pension. Also known as SERPs and more recently S2P.
Introduced in 1978 the additional State Pension was designed to give us extra income in our retirement years. Originally it was based on National Insurance contributions, meaning the more you earned, the higher your additional pension would be.
It was introduced as SERPS, which stood for the State Earnings Related Pension Scheme. It was compulsory for everyone making National Insurance contributions. It was an earnings related pension, but did not benefit those unable to work.
SERPS
SERPS was replaced in 2002 by S2P, the State 2nd Pension, which was designed to give a fairer deal to those in need. Those on low to medium incomes, carers and people with a long term disability or illness now benefit from the new scheme and providing they fulfil certain criteria now build up an additional State Pension through credits.
Whilst currently, the more you earn, the more you receive, up to a limit, the government wants to make the additional State Pension a flat rate payment by 2030.
Not in Paid Employment
If you don’t make National Insurance contributions, either through not working or earning less than the minimum tax band you may still benefit from the S2P scheme. If you are looking after a child under the age of 6, or someone with a long term illness or disability, you may qualify to build up an additional State Pension anyway. If you qualify you will build up just over £1 a week for each full tax year you are caring for someone.
If you yourself are suffering from a long term illness or are disabled you could also qualify. If you are entitled to long term Incapacity Benefit you will also build up S2P for each full tax year you claim the benefit. This will only apply if when you reach State Pension age you have paid Class 1 National Insurance contributions for at least a tenth of your working life, since 1978.
If you want to have more for your retirement, see other saving options Here
Contracting Out
There was until 2012 the option to contract out of your additional State Pension.
From April 2012 the option to contract was abolished, simplifying the process and making it easier to understand. Those already contracting out will be able to continue to do so.
This table compares four saving products that can help you to save more for your retirement. We have chosen products that can bring you extra money in the future. Which one to choose from, it will depend on the type of investment you want.
| Provider | Product | Advantages | Disadvantages | More Info |
|---|---|---|---|---|
 |
MoneyBuilder | • Tax free end cash pay-out • Monthly contribution starts at only £10 • Life cover included |
• 15 years plan • Early “cash in” is not an option as you will lose too much |
 |
 |
Stocks&Shares ISA | • Returns free of Income and Capital Gains Tax under ISA rules • Monthly contribution from £30 • No restrictions on the amount of time you keep the money invested • You can transfer the ISA |
• £10,680 maximum contribution in one year • It isn’t risk free |
|
 |
Cash ISA | • Good online support and advising • You can transfer the ISA • They won’t charge for withdraws • You know what savings rates to expect • Tax free interest |
• £5,340 maximum contribution in one year | |
 |
3 year Fixed Rate ISA | • Fixed rate, risk free • You can transfer the ISA • Tax free interest |
• £5,340 maximum contribution in one year • Limited to 3 years |
|
More Information on State Pensions
Voluntary National Insurance Contributions
