State Second Pension.
On 6 April 2002, the State Second Pension (S2P), introduced by the Child Support, Pensions and Social Security Act 2000 replaced the State Earnings Related Pension Scheme (SERPS).
Not available for self-employed individuals, SERPS was set up in 1975 by the Social Security Pension Act 1975 and began in 1978. It is independent of basic state pension entitlement and it is based on a proportion of earnings during your working life.
S2P will initially start as an earnings-related scheme similar to SERPS but with three different accrual rates and the build up will vary for each tax year depending on the individual’s earnings.
It is predicted however that at some point in the future, this will change to a flat-rate scheme to accrue uniformly over 40 years.
