State Earnings Related Pension Scheme
During the course of the working life of any employee in the UK they will pay Class 1 National Insurance Contributions. A proportion of these contributions are paid into the State Earnings Related Pension Scheme (SERPS). However, it is possible for the contributor to elect to have this proportion invested in their own personal pension policy. This is commonly known as claiming to opt out of SERPS. If the contributor is confident that they have not made any claim to opt out of SERPS then they will need to read the following warning. It is also worth noting that anyone receiving a state pension forecast should look at the entries made on the forecast carefully to ensure that they are correct.
State Pension Forecast
When a man is approaching his 65th birthday, or a woman her 60th, they will be sent a form from the Pension Agency that will allow the recipient to claim their state pension. When the form has been processed, the Pension Service will issue a state pension forecast. This must be very carefully checked. It is important to ensure that there are no missing National Insurance Contributions that have not been accounted for. This is because if all of the contributions have not been accounted for correctly, then this will result in a lower state pension being paid to the claimant.
Appeal
From receiving the forecast, the claimant will have only have 30 days from the date of the forecast to appeal against it if they are unsure that the contributions making up the pension forecast has been correctly accounted for.
Phantom Opt-Outs
In recent months it has come to our attention that claimants who have not in previous years elected to opt out of SERPS have received state pension forecasts that note that they had opted out of SERPS during identical periods from 1978 to 1997. Following an appeal, in one case the Pension Service restated the forecast without any challenge and awarded further pension of approximately £80 per week (over £4000 per year!).
Barnes Roffe Topical Tips
If you are uncertain about your SERPS position, please contact your Barnes Roffe LLP contact partner immediately so that they can arrange for the forecast to be reviewed.
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PLEASE NOTE: By the very nature of this type of information the details of tax law might have changed since they were published, so contact your Barnes Roffe partner before acting on any matter contained in these documents.