State Second Pension

In April 2002 the State Second Pension replaced the State Earnings Related Pension Scheme (SERPS) to pay a top-up pension based on employed people's earnings. Anyone earning over £3,500 but under £9,500 a year will be treated as if they earn £9,500 so their S2P could be as much as doubled. People earning between £9,500 and £21,600 will see a smaller increase. There will be no change for people earning over £21,600.

Carers on less than £3,500 a year or who have no earnings will get credits for the S2P and will be treated as if they earn £9,500 a year. To qualify for credits they must get child benefit for a child under 6, be entitled to invalid care allowance or get home responsibility protection because they are caring for a sick or disabled person.

Later on S2P will change and anyone earning over £9,500 will be better off opting out in favour of a private or occupational pension scheme.