Have you got a mis-sold SERPS pension?

Carina Chambers | 28/11/2023



If you’ve got a SERPS pension that you think you were mis-sold, you could be in line for compensation.

SERPS stands for the State Earnings Related Pension Scheme. It was introduced in the 1970s as a top-up to the basic State Pension and is often referred to as the Additional State Pension. It was then replaced by the State Second Pension.

Many people were advised to opt out of SERPS and instead had their National Insurance rebates paid into a personal pension, hoping it would provide them with better retirement benefits. However, some people would have been better off staying put in SERPS rather than contracting out, which is why it may now be possible to claim compensation if you were advised to opt-out. Here's what you need to know.

How do I find out if I was contracted out of SERPS?

You can find out if you were contracted out by checking with your employer, or by looking at your payslips, which should show whether you opted out of SERPS. If you need some help or don’t have those details our SERPS pension tracing page explains ‌how we can easily do all the hard work, including checking with HMRC if you have a lost SERPS pension and then help you find and transfer any lost pensions into your new personalised pension plan.

Initially, contracting out was only available to people with final salary schemes. Those who worked in the public sector, for example, the NHS, the police or the armed forces, and had this type of pension are more likely to have been contracted out than people working in other professions. Contracting out was widened to money purchase or defined contribution schemes in 1998.

Why would I have been contracted out?

Opting out of SERPS meant you’d pay lower or redirected National Insurance contributions for what would hopefully be a higher private pension. It was therefore popular with employers, as it meant they had to pay less National Insurance.

How do I know if I'm eligible for mis-sold SERPs compensation?

You’ll only be eligible to make a claim for mis-sold pension SERPS compensation if you meet certain specific criteria.

First, you must have been advised to contract out of SERPs between 1 July 1988 and 5 April 1997. If you contracted out after March 1997, you will have no SERPS entitlement in relation to earnings after that point.

At the time you contracted out, you need to have been aged over 45 if you’re a man and over 40 if you’re a woman. These are considered the “pivotal ages" at which point there would be a lower likelihood of investment returns producing a greater retirement income than remaining in SERPS.

Finally, you must have been earning at least £10,000 a year every year to qualify to make a compensation claim.

How can Profile Pensions help?

Profile Pensions do not deal with mis-selling claims but we can help you to trace your SERPS pension, offering expert support throughout the process. Our goal is to make this experience simple and hassle-free.

Getting started is quick and easy. Complete our online pensions questionnaire in a few minutes. The answers help us create your new personalised pension plan and allow us to contact HMRC about your potential missing SERPS pensions.

We usually hear from HMRC within 30 days, but this can take longer.
You’ll get a message via your secure online account when we’ve heard back from them. If HMRC tells us about a SERPS pension, you’ll then be able to use our Find, Check & Transfer service to locate these pensions. If you decide to transfer your SERPS pension to us we will do all the hard work for you, including checking for any benefits or penalties and completing the transfer. (One-off 1% arrangement fee applies)

If you think you may have a SERPS mis-selling case, you’ll need to contact the adviser who recommended you opt out of SERPS and ask them to put things right. If you’re not satisfied with their response, you should contact the Financial Ombudsman Service, a free independent service for settling disputes between financial services companies and their customers.

Another option is to use a claims management company specialising in SERPS miss-selling claims but bear in mind that they will charge you for their services, so make sure you understand exactly how much you’ll have to pay. You can find out more about making a complaint at the Financial Conduct Authority Website.

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