Have you got a mis-sold SERPS pension?

Ollie Bryden | 02/07/2020


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 It has now been replaced by the State Second Pension.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 in the hope that this would provide them with better retirement benefits. However, in some cases they would have been better off staying put in SERPS 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. Our pension tracing page explains in detail how to trace any lost pensions using the service provided by the Government, but if you need support with it our pension experts can help, just send an email to [email protected]. More info on this below.

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

Why would I been contracted out?

Opting out of SERPS meant you’d pay lower or redirected National Insurance Contributions in exchange 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 you 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?

If you want to search for a lost SERPS, drop us an email ([email protected]) and we will send you the form that you need to fill in and send back to the HMRC.

Once you've printed this out, complete the form and send it to SARS/DPU, National Insurance Contributions & Employers Office, HM Revenue and Customs, BX9 1AN.

HMRC will tell you your contracted-out of SERPS pension history. HMRC will typically take around 30 days to respond, so keep an eye out for their response. When you hear back from HMRC they will let you know where your pensions are if you contracted out of SERPS.

If you would then like  to move these old pensions into a modern pension plan tailored to you  sign up to our service online, and we'll take care of everything for you. Just sign up to our impartial pension investment advice service with the pension information HMRC provide you.

If you think you may have a SERPS mis-selling case, you’ll need to contact the adviser who recommended you opted 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 mis-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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