What is SERPS?

SERPS, or State Earnings Related Pension Scheme, was introduced in 1978 and ended in 2002 when it changed to S2P. So, you might be wondering where your money is now if you opted out before this date.

How did SERPS work?

SERPS was a government pension scheme that topped up your State Pension. Before the changes in 2016, the State Pension had 2 tiers: a basic rate which everyone received and an addition rate made up from SERPS contributions.

Some people had the option to opt out of SERPS, and any contributions they had made to the scheme were reinvested elsewhere. And where you invested this money will determine the route you need to take to access it.

What if I opted out of SERPS?

In 1988, people had the option to opt out of SERPS. If you chose to do so, then your money would have been reinvested in other retirement schemes. You would have had the option of either a personal pension or the company final salary scheme.

Where is my money now?

If you opted out of SERPS, you would have chosen to either reinvest your savings in a personal or company pension.

If you weren’t given the option to opt out, it’s likely that it was automatically done for you. And since opting out doesn’t mean any additional pension payments, you may not be aware of where your money was reinvested. If that is the case, the government offers an online tracking tool that helps you track down old pensions. This should give you a better idea of where your savings were reinvested.

Can I access my money from SERPS?

When you opted out of SERPS, your money would have been reinvested in a different pension scheme. It’s likely that it was reinvested in a pension plan known as a ‘protected rights pension’. However, this was abolished in 2012 meaning that the money is available for pension release.

You would have been given the option to reinvest your savings in either a money purchase or final salary pension and your choice will determine how and when you can access your savings.

If you chose a money purchase pension then from the age of 55 you can start to access your money in whichever way you choose, be it tax-free cash, lump sums or taking a regular income. It’s a good idea to speak with a financial adviser before accessing the money in your pension as taking too much too soon could leave you with less to live on later in life.

If you chose a company final salary pension then the rules are a little different. This is for good reason because this type of pension has great benefits attached, such as a guaranteed income for life from a set age. Each pension provider has different rules about how you can access the money in this type of pension, and from what age.

Can a financial adviser help me access my money?

Absolutely. And in most cases, it’s best to seek the help of a financial adviser before accessing your pension. Pensions can be tricky and complicated. A financial adviser will be able to explain the type of pension you reinvested your money in, and what options you have for accessing it.

Accessing money saved in a final salary pension can also mean impacting the benefits attached to it, and this could leave you worse off at retirement. A financial adviser will help you access your pension savings in the right way to make sure that you still have what you need throughout retirement.

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The details provided in this article are for general information only and are in no way deemed to be financial advice. All of the material is correct as of the publication date, but could be out-of-date by the time you read the article.