SERPS, S2P, Contracted Out, Protected Payment

SERPS, S2P, "contracted out" and "protected payment" are four different things, and the confusion between them decides how much of your husband's State Pension you can actually inherit. They tend to arrive together — on a State Pension forecast, in an old scheme booklet, or in a letter from the Pension Service after a death — and because they all sound like jargon for the same idea, people read them as interchangeable. They are not. Three of them belong to the old State Pension, one belongs to the new one, and each is inherited under its own rule.

Here is the short version. If your husband built up an inherited State Pension from SERPS, you may be able to receive a share of it, but how much depends on his date of birth and on whether he was ever contracted out. If he reached State Pension age under the new system that began in April 2016, there is usually no SERPS to inherit at all — instead you look for a protected payment, half of which can pass to a surviving spouse. Which of those paragraphs applies to you is decided by a single fact: the date he reached State Pension age.

The one date that decides which rules apply

Everything here turns on when the deceased reached State Pension age, because that is what determines whether he was in the old system or the new one.

The new State Pension started on 6 April 2016. A man born on or after 6 April 1951, or a woman born on or after 6 April 1953, comes under it. Anyone who reached State Pension age before that date is on the old basic-plus-additional State Pension, and it is the old system that contains SERPS and S2P. So the first thing to establish, before you try to work out what you can inherit, is which side of that line your husband or wife fell on. Get that wrong and you will spend hours reading rules that do not apply to your situation.

The two systems answer the same question — what does a survivor inherit — in completely different vocabularies. The old system talks about inheriting a percentage of the "Additional State Pension". The new system talks about inheriting half of a "protected payment". Neither term appears in the other system, which is exactly why the four words on the letter cause so much trouble.

SERPS and S2P: the old Additional State Pension

Under the old State Pension, most employees built up two things: the flat-rate basic State Pension, and an earnings-related top-up called the Additional State Pension. That top-up had two eras with two names.

SERPS — the State Earnings-Related Pension Scheme — ran from 1978 to 2002. The more you earned as an employee, the more SERPS you built up. S2P, the State Second Pension, replaced it from 2002 to 2016 and was reshaped to be more generous to lower earners and to some carers. For most people who worked across those decades, the "Additional State Pension" on a forecast is a mixture of the two.

When it comes to inheriting it, the two halves are treated differently. A surviving spouse or civil partner can inherit between 50% and 100% of the deceased's SERPS, and the maximum percentage is fixed by his date of birth — the oldest cohorts can pass on the whole amount, and the proportion steps down for those born later. For S2P, a survivor can inherit up to 50%. You do not get to choose; the figures are set by the deceased's record and date of birth, not by anything either of you can nominate.

Source: GOV.UK, Additional State Pension (inheriting Additional State Pension).

One condition catches people out. You cannot inherit any of this if you remarried or formed a new civil partnership before you reached your own State Pension age. If you were already over State Pension age when you remarried, the entitlement can survive, but the timing genuinely matters, so check where your own State Pension age falls before assuming anything.

What "contracted out" did to it

"Contracted out" is the word that quietly shrinks the number, and it is the one people understand least.

For years, an employee in a suitable workplace pension could be "contracted out" of the Additional State Pension. In exchange for paying lower National Insurance — or for the scheme receiving a rebate — you stopped building up SERPS or S2P for that period and built up a promise in the workplace scheme instead. The State stepped back; the employer's scheme stepped in. Contracting out through salary-related final-salary schemes ended on 6 April 2016 when the new State Pension arrived, and it had already ended for money-purchase schemes in 2012.

The consequence at death is straightforward once you see it. Any period your husband was contracted out is a period for which there is little or no additional State Pension for you to inherit — because he was not building it up then. What he was building up instead was a benefit inside the workplace scheme, and that scheme usually pays its own survivor's pension under its own rules. So the honest answer to "how much of his State top-up do I get?" is often "less than you would expect from the State, but look at his old workplace scheme, because that is where the rest of it went." Check both, never just one.

Protected payment: the new State Pension's inheritable slice

If the deceased reached State Pension age on or after 6 April 2016, forget SERPS and S2P as live entitlements and look instead for a protected payment.

When the new State Pension began, everyone with a National Insurance record was given a "starting amount" on 6 April 2016 — the higher of what they had built up under the old rules and what they would have had under the new ones. Where that starting amount came out higher than the full new State Pension, the difference is called a protected payment. It is, in effect, the part of an older, larger old-system entitlement that the new flat rate would otherwise have swallowed, kept and paid on top.

A surviving spouse or civil partner can normally inherit half of a protected payment. The important restriction is that your marriage or civil partnership must have started before 6 April 2016; a couple who married after that date cannot inherit a protected payment from each other. Beyond the protected payment, the new State Pension is deliberately built as an individual benefit, so there is far less to pass on to a survivor than there was under the old system — a change that surprises couples who assumed one person's State Pension simply continues for the other.

Source: GOV.UK, The new State Pension — inheriting or increasing State Pension from a spouse or civil partner.

What you cannot inherit, and what fills part of the gap

Two hard facts are worth stating plainly, because the gap they leave is often larger than families expect.

First, the basic State Pension and the flat-rate new State Pension are not pots of money that get handed over. They are individual entitlements that stop when the person dies. What a survivor may inherit is a share of the earnings-related extras — the Additional State Pension or a protected payment — not the whole of the deceased's weekly amount. Second, State Pension is paid in arrears, and any payment that covers days after the death can be reclaimed; we set out how that plays out, and how to avoid a nasty surprise on the bank statement, in our guide to when the DWP takes State Pension back out of the account after a death.

Some of the gap is filled by other help. If you were under State Pension age when your husband or wife died, you may qualify for bereavement support rather than the State Pension top-ups, which Class 3 voluntary contributions do not buy. If you were already over State Pension age, the position is different again, and we cover it in what a bereaved spouse over State Pension age can and cannot claim. And where the earnings-related State Pension was reduced by contracting out, the missing income is one reason many households hold separate cover; if you want to understand what that would look like against your own circumstances, you can get life insurance quotes and have an FCA-authorised broker price it.

How to get the real number for your own case

General rules only take you so far, because the exact figure depends on a record that only the Pension Service holds. The reliable route is to ask them directly rather than trying to reverse-engineer it from a forecast.

If you are dealing with a death, contact the Pension Service and ask specifically what inherited Additional State Pension or inherited protected payment you are entitled to, and from what date it will be paid. If you are trying to plan while both of you are alive, each of you can request a State Pension forecast, which shows your own starting amount and any protected payment, and a National Insurance record, which reveals the contracted-out years that will have reduced the additional element. Put the two forecasts side by side. That is the honest basis for working out what the survivor would actually live on — far better than a headline figure that ignores contracting out.

While you are looking at pensions, this is also the moment to check the private and workplace side, because the State Pension is usually the smaller part of the picture. Our guide to pensions, nominations and death benefits walks through the workplace and personal schemes, and if annuities are in play it is worth knowing that a plain single life annuity can pay nothing at all to a survivor. If a private pension pot is involved, the rules are changing, and our explainer on whether to draw a pension down before the 2027 inheritance tax change is the companion piece to this one.

Scotland and Northern Ireland

The State Pension is a reserved matter, so the rules on SERPS, S2P, contracting out and protected payments are the same for someone in Glasgow or Cardiff as for someone in Manchester. There is no separate Scottish or Welsh State Pension, and the amounts a survivor can inherit do not change with the border.

Northern Ireland runs a parallel social security system rather than the Great Britain one, but the substance mirrors it: the same categories, the same inheritance percentages, the same State Pension ages. The practical difference is administrative — in Northern Ireland you deal with the Department for Communities and its guidance through nidirect rather than the Great Britain Pension Service. What you can inherit does not change; only the office you contact does.

Frequently asked questions

Can I inherit my late husband's SERPS?

Where you both reached State Pension age under the old system, a widow can inherit a percentage of the deceased's Additional State Pension, and the maximum for SERPS depends on his date of birth, ranging from 50% up to 100%. Up to 50% of any S2P can be inherited as well. If he was contracted out for part of his career, that part was replaced by a workplace scheme, so it is reduced or absent from the State figure and you should check the workplace scheme too.

What is a protected payment?

Under the new State Pension a protected payment is the amount by which your starting figure at 6 April 2016 exceeded the full new State Pension. A surviving spouse or civil partner can normally inherit half of a protected payment, provided the marriage or civil partnership began before 6 April 2016 and subject to the rules on State Pension age. Outside that protected payment there is generally little to inherit under the new system, because it is designed as an individual entitlement.

What does contracted out mean for what my family inherits?

Being contracted out meant paying lower National Insurance while building benefits in a workplace scheme instead of the Additional State Pension. It generally reduces what a survivor can inherit from the State for those years, because the entitlement was building up in the workplace scheme instead. That scheme usually provides its own survivor's benefits, so the right approach is to check both the State Pension inheritance and the workplace scheme, not just one.