SERPS Pensions Explained: Can You Cash Yours In?

Reviewed by Neil AinsworthLast updated: June 3, 2026 5:00 pm

In this article:

What Is SERPS?
Eligibility for SERPS
Can You Cash In Your SERPS Pension?
Considerations Before Accessing Pension Funds
A Financial Adviser Can Help

Understanding the State Earnings-Related Pension Scheme (SERPS) and how it feeds into your State Pension can help with retirement planning. SERPS ran from 1978 to 2002 and provided an earnings-related top-up to the Basic State Pension. The rules can be complex, especially around whether it can be taken as cash. This guide explains what SERPS is, who built it up, and what you can and cannot do with it.

What Is SERPS?

SERPS, or the State Earnings-Related Pension Scheme, was established to supplement the Basic State Pension¹ by providing an additional, earnings-related amount for employees. It ran from 1978 to 2002, when it was replaced by the State Second Pension² (S2P). For people reaching State Pension age³ on or after 6 April 2016, both SERPS and S2P were absorbed into the new State Pension system.

The amount someone built up under SERPS depended on their employee earnings, on which Class 1 National Insurance (NI)⁴ was paid, and on their qualifying years. In payment, the Additional State Pension (which includes SERPS) is generally increased each April in line with the Consumer Prices Index (CPI)⁵. Under the new State Pension, any protected payment above the full rate is also uprated by CPI.

Whether you contributed to SERPS matters because it affects the Additional State Pension you may receive (if you reached State Pension age before 6 April 2016) or the “starting amount” used to calculate your new State Pension (if you reached it on or after that date). If you were contracted out, you and your employer paid lower NI, and you built up rights in a workplace or personal pension instead; this typically reduces the amount of Additional State Pension you receive. Your State Pension forecast may show a COPE (Contracted-Out Pension Equivalent⁶) figure to explain this; COPE is not an amount paid by the government.

To review your position, use your Personal Tax Account on GOV.UK⁷ to check your NI record and get a State Pension forecast. HMRC maintains your NI record and the Department for Work and Pensions⁸ (DWP) provides the forecast. If you are already at State Pension age, you can contact the Pension Service for help.

Understanding how past contributions and any periods of contracting out influence your current entitlement can support better retirement planning.

Eligibility for SERPS

Eligibility for SERPS depended on being employed and paying Class 1 NI between 1978 and 2002, the years the scheme operated. Employees automatically accrued entitlement unless they were contracted out to a workplace or personal pension. People who were solely self-employed did not build up SERPS because they did not pay Class 1 NI as employees.

Understanding Contracting Out

Contracting out meant some of your and your employer’s NI that would otherwise have supported SERPS was redirected. In defined benefit (salary-related) schemes, this took the form of paying lower NI in exchange for the scheme’s promise of at least a minimum level of benefits. In defined contribution schemes, NI rebates were paid into your pension (often referred to as “protected rights”). Being contracted out usually reduces the Additional State Pension you receive from the government, with the expectation that your workplace or personal pension makes up the difference.

Key Factors Influencing SERPS Benefits

Employment duration: The length of time you were an employee paying Class 1 NI during 1978–2002 affected the Additional State Pension you built up.
Income level: Because SERPS was earnings-related, higher relevant earnings led to a larger Additional State Pension entitlement.
Contracting-out period: Longer periods of contracting out generally mean a lower Additional State Pension from the state, with more expected from your workplace or personal pension.

Legislative changes can affect how entitlements are calculated and increased. Additional State Pension and protected payments are uprated in line with CPI, helping benefits keep pace with inflation.

Checking Your SERPS Eligibility

To see what you have built up, check your NI record and State Pension forecast on GOV.UK. Your forecast may show a COPE figure to illustrate the effect of any contracting out; this is not deducted from, or paid by, the State Pension, but indicates what your workplace or personal pension might provide instead.

Knowing whether you built up SERPS, the impact of any contracting out, and how this feeds into your State Pension can help set realistic retirement expectations.

Can You Cash In Your SERPS Pension?

No. You cannot cash in SERPS directly because it forms part of your State Pension entitlement. The State Pension is paid as a regular income from State Pension age⁹ (currently 66, rising gradually to 67 between 2026 and 2028). However, there are ways to influence how and when you receive your State Pension, and you may have separate private pension savings from any period of contracting out:

Defer your State Pension: You can choose to defer. The option to take a deferral lump sum no longer applies under the new State Pension.
Pension freedom rules (private pensions only): Pension freedoms do not apply to the State Pension or to SERPS itself. If you were contracted out and built up savings in a workplace or personal pension, those are separate from the State Pension and can usually be accessed from age 55 (rising to 57 from April 2028)¹⁰. Options typically include taking lump sums, income drawdown, or buying an annuity, subject to tax.

Transferring a contracted-out pension (not SERPS)

You cannot transfer the State Pension or SERPS. If you were contracted out into a workplace or personal pension, you may be able to transfer that private pension to another scheme. Transferring can offer different investment options or charges, but it can also affect guarantees and future income.

Options for Transferring

Moving your pension from one private scheme to another may be useful if you want different investments or lower fees. Carefully compare the benefits and features of both schemes, and remember that different investments carry different risks, which can affect future outcomes.

Key Considerations Before Transferring

Evaluate guaranteed benefits: Check for valuable guarantees in your current plan (for example, a guaranteed annuity rate or defined benefits) that may be lost on transfer.
Understand the charges: Consider any transfer or exit fees, as well as ongoing fees, to assess whether a transfer is likely to be cost-effective over time.
Assess investment risk: Ensure the new plan’s risk level and investment approach align with your goals and risk tolerance, especially as you approach retirement.

Given the complexity and long-term impact of pension transfers, regulated financial advice is strongly recommended. By law, if you are transferring from a scheme with safeguarded benefits (such as a defined benefit pension) worth more than £30,000, you must seek advice from an FCA-authorised adviser.

In summary, while you cannot cash in SERPS, you can consider deferring your State Pension and, separately, manage any private pensions built up through contracting out under the pension freedoms. Weigh the tax, risk and income implications before deciding.

Considerations Before Accessing Pension Funds

Before making decisions about deferring, transferring, or accessing pensions, reflect on the following:

Financial needs: Assess your likely income and spending in retirement, alongside savings, debts, and expected lifestyle costs. A realistic budget should allow for costs that may rise with age, such as healthcare.
Tax implications: Withdrawals from private pensions are taxable on the amount above the tax-free element.
Investment risks: Moving from guaranteed income to investment-based options introduces market risk. Values can fall as well as rise, and you may get back less than you invested, which can affect retirement income.
Scams: Be cautious about unsolicited contact, pressure to act quickly, or offers that sound too good to be true. Check firms and individuals on the FCA Register and do not proceed unless you are confident they are authorised.
Longevity risk: The risk of outliving your savings. If you use drawdown, sustainable withdrawal rates are important. Annuities or other guaranteed-income products may help manage this risk.

Additional Considerations

When planning access to pensions, keep the wider picture in mind:

Review your entitlement to state benefits, which can be affected by changes in your income.
Consider the effect of inflation on spending power over time, particularly if you rely on a fixed income.
Check any health or care-related insurance provisions that could offset future costs.

Seek Professional Advice

Because pension decisions can have lasting consequences, regulated financial advice can be valuable.

Taking time to understand your options, tax position, and risks will help you make informed, sustainable choices.

A Financial Adviser Can Help

Given the complexities of SERPS, contracting out, and pension options, professional advice can help you weigh up the pros and cons in your circumstances, including tax, benefits, and long-term income security.

Whether you are thinking about deferring your State Pension, understanding a COPE figure on your State Pension forecast, or reviewing private pensions built up through contracting out, an adviser can help you assess your choices.

At FinancialAdvisers.co.uk, we can connect you with an FCA-authorised and regulated financial adviser in your area who specialises in pensions and retirement planning. Any advice will be tailored to your circumstances and may involve fees; advisers should explain costs and the scope of service before you proceed.

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