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3.
STATE PENSION BENEFITS
Until 6 April 2016, the State retirement pension consisted of two parts:
the basic State (“old age”) pension,
plus
an additional earnings-related top-up pension. Until 6 April 2002 this top-up was called
the state earnings-related pension scheme or SERPS. Its name was then changed to the
State second pension.
From 6 April 2016 both elements of the State retirement pension were abolished and replaced
by a single-tier State pension. You will be entitled to the single-tier State pension if you have
paid, or been credited with enough National Insurance Contributions (NICs) during your
working life. You will accrue the maximum amount of State pension if you have paid NICs
for 35 years.
Your entitlement to a State pension will be reduced, however, if you were a member of a
pension scheme which was “contracted-out” of SERPS or the State second pension before 6
April 2016. If you were a member of such a pension scheme, you and your employer paid a
lower rate of NICs, and in return the scheme had to provide a pension that met at least a
minimum standard or, before 6 April 1997, provided a pension which was at least broadly
equal to the SERPS pension you would have earned if the scheme had not been contracted-
out – that is, a Guaranteed Minimum Pension or GMP.
The GFTU scheme was contracted-out until 6 April 2016. As a result, until you have paid
full rate NICs for 35 years, your State pension will be reduced to account for the fact that you
paid a lower rate of NICs until 2016. You should remember however that the reason why is
that the GFTU scheme provided you with a pension that was better than the SERPS or State
second pension that you would have built up if the scheme had not been contracted-out.
You can check the amount of your expected State pension at
https://www.gov.uk/check-state- pension.Contracting-out before 6 April 1997: Guaranteed Minimum Pensions (GMPs)
If you were a member of the scheme before 6 April 1997, you were contracted-out of the
additional earnings-related element of the State pension (known at the time as SERPS). You
and the GFTU paid lower NICs, and in return the Scheme must always pay you a pension
which is at least broadly equal to the SERPS pension that you would have built up if the
Scheme had not been contracted-out. This is called your Guaranteed Minimum Pension or
GMP. If you are survived by a widow, widower or Civil Partner when you die, your widow,
widower or Civil Partner must be paid at least half of your GMP, called a widow/er’s GMP or
WGMP.