Why does the point in solution: "S2P provides a more generous additional pension than SERPs for low and moderate earners (those whose earnings fall into the first two bands above)". Why is it the first 2 bands? As Band 2 as this is only 10% accrual?
Have to check the maths later, but I think it means the total accrual for people up to end of band two is higher under S2P than it would have been under SERPS?
YetAnotherStudent is correct to say that it is the impact of the 40% accrual on the first salary band that outweighs the (lower than SERPS accrual) 10% accrual on the second band. The SERPs and S2P pension accrual is identical for someone earning at the rate of the Upper Earnings Limit. For anyone earning less than this amount then accrual under S2P is higher. Question 4 in Chapter 2 should help explain this further.
