General Principle
The purpose of the scheme was to provide a pension related to earnings, in addition to the basic state pension.
The principle was that everyone would receive a SERPS pension of 25 per cent of their earnings above a "lower earning limit" (approximating to the amount of the basic state pension). The scheme was phased in over twenty years so that those retiring before 1998 received a SERPS pension proportional to the number of years that they had made contributions to it. There was an "upper earning limit" of about seven times the lower earning limit, beyond which earnings were disregarded for NI contributions and calculation of SERPS pensions.
Under the Social Security Act 1986 the target SERPS pension was reduced from 25 to 20 per cent of average earnings between the two limits. Pensions earned before 6 April 1988 were not reduced and the change was to be phased in for people retiring between 1999 and 2009.
Read more about this topic: State Earnings-Related Pension Scheme
Famous quotes containing the words general and/or principle:
“There was not a tree as far as we could see, and that was many miles each way, the general level of the upland being about the same everywhere. Even from the Atlantic side we overlooked the Bay, and saw to Manomet Point in Plymouth, and better from that side because it was the highest.”
—Henry David Thoreau (1817–1862)
“He was always late on principle, his principle being that punctuality is the thief of time.”
—Oscar Wilde (1854–1900)