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 withdraw 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, you can track down your funds by contacting HMRC.

All you would need to do is write a letter stating that you are wanting to track down your SERPS pension. HMRC will then get back to you within 30 days with information about where your money is now. Your letter should include:

• Your full name
• Your date of birth
• Your National Insurance number

This letter can then be sent to:

SARS/DPU
National Insurance Contributions & Employers Office
HM Revenue and Customs
BX9 1AN

Can I withdraw 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 withdraw your savings.

If you chose a money purchase pension then from the age of 55 you can start to withdraw 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 withdrawing the money in your pension as releasing funds early will leave you worse off in retirement.

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 withdraw the money in this type of pension, and from what age.

Can a financial adviser help me withdraw my money?

Absolutely. And in most cases, it’s best to seek the help of a financial adviser before withdrawing 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 withdrawing it.

Withdrawing 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 withdraw your pension savings in the right way to make sure that you still have what you need throughout retirement.