Reductions in Inherited SERPS

The State Earnings Related Pension Scheme (SERPS) was introduced in 1978 by a Labour Government. Originally, widow(er)s could inherit 100% of their late husband’s SERPS.

In 1986, the Conservative Government, concerned at the emerging costs of SERPS, passed legislation which reduced the percentage of SERPS which could be inherited from 100% to 50% in respect of a death on or after 6 April 2000. However, as a result of inadequate publicity for this change, the Labour Government decided to postpone it until 6 October 2002 and to phase in the reduction so that the full 50% cut would not be achieved until 6 October 2010. For those who had been misinformed and were not fully covered by the new arrangements, the departmental compensation scheme was a possibility.

This note looks at why the reductions were made, the campaign for compensation and how the Labour Government responded. A separate note CPB-07631 Inheriting additional State Pension provides more general overview of the provisions both in the old system (for those reaching State Pension age before 6 April 2016) and the new one (for those reaching State Pension age after that date).