The formulae for calculating the S2P pension built up over a working life is complex and weighted towards low earners. For example, based on 2008/09 figures and ignoring the forthcoming changes contained in the Pensions Act 2007, the theoretical maximum S2P figure based on membership from age 16 to SPA is currently:
| Earnings £ per year |
S2P £ per year |
| Less than 4,680 | Nil |
| 4,680 - 13,500 |
3,528 |
| 20,000 |
4,178 |
| 30,000 |
5,178 |
| 40,040 or more | 7,076 |
Currently, S2P pensions in payment increase in line with retail prices.
The future of S2P
In practice, the above figures are due to change, thanks to the Pensions Act 2007. In 2009/10 the upper limit of earnings for S2P will be frozen at its current level (equivalent to £770 a week). From 2010, the formula will be worsened for those earning more than £31,100 (in 2008/09 terms). The overall effect will be that eventually – by around 2031/32 – S2P will become a purely flat rate scheme producing a pension equivalent to around £3,500 a year in today’s terms
These changes will only affect future entitlements; benefits accrued in earlier years will not be affected.Last Updated
