SSP

SSP Statutory Sick Pay State Second Pension UK Employment Pensions Benefits
An abbreviation that can refer to either Statutory Sick Pay or State Second Pension, SSP is a term often encountered within UK employment and benefits legislation.
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Definition of SSP

1. Statutory Sick Pay (SSP)

Statutory Sick Pay (SSP) is a benefit provided by the UK government to employees who are unable to work due to illness. Employers are required to pay SSP to qualifying employees who have been off work for four consecutive days or more due to sickness.

Key Points:

  • SSP is paid by employers, not the government.
  • The current rate (as of 2023) is £109.40 per week.
  • Employees must earn at least £123 per week before tax to qualify.
  • SSP can be paid for up to 28 weeks.
  • Employees can receive SSP for one illness if it overlaps with another or is within eight weeks of the previous sickness period.

2. State Second Pension (SSP)

The State Second Pension (SSP), previously known as SERPS (State Earnings Related Pension Scheme), was a UK government pension scheme designed to augment the basic State Pension. Contributions were made while working, and it aimed to provide a higher pension to low and moderate earners.

Key Points:

  • Replaced by the Single-Tier Pension in April 2016 for new retirees.
  • Boosted retirement income based on earnings and National Insurance contributions.
  • Higher contribution rates meant higher additional pension.
  • Provided benefits over and above the Basic State Pension.
  • Flexibility in opting out through private pension schemes, often referred to as “contracting out.”

Examples

Statutory Sick Pay

  1. Example 1: Jane, who works as an admin assistant, falls ill with the flu and has been off work for a week. Her employer pays her SSP instead of her usual wages.
  2. Example 2: Mark, a factory worker, is injured and unable to work for three months. His employer pays him SSP for the 12-week duration before other benefits might be considered.

State Second Pension

  1. Example 1: Sarah has been earning £25,000 per annum for 30 years and opted into the SSP, contributing towards it. Upon retiring, her state pension includes the Basic State Pension plus a significant additional amount from the SSP.
  2. Example 2: John chose to contract out of the SSP and invested into a private pension scheme instead. His future state pension will only include the Basic State Pension, supplemented by his private pension income.

Frequently Asked Questions

FAQs on Statutory Sick Pay

Q: Who qualifies for Statutory Sick Pay?

A: Employees who have been sick for four or more consecutive days, earn at least £123 per week, and have adhered to their employer’s sickness reporting procedures.

Q: How is SSP paid?

A: SSP is typically paid in the same way as usual wages – through the employer’s payroll system, with the appropriate income tax and National Insurance contributions deducted.

FAQs on State Second Pension

Q: Can I still receive the State Second Pension if I retire after April 2016?

A: No, the State Second Pension has been replaced by the Single-Tier Pension for those retiring after April 2016. However, your contributions up to that point will be factored into your overall state pension benefits.

Q: What happens to my contracted-out pension contributions?

A: If you contracted out of SSP, those contributions were redirected to an approved private pension scheme, which should provide an additional pension income alongside your Basic State Pension.

  • Basic State Pension: A government-provided pension based on National Insurance contributions, aimed at providing a basic level of income in retirement.
  • Contracting Out: The practice of opting out of certain state pension schemes such as the SSP, redirecting contributions to an approved private pension scheme.
  • National Insurance Contributions (NICs): Payments made by employees and employers in the UK to qualify for certain benefits including the state pension.
  • Single-Tier Pension: Introduced in April 2016 to replace the Basic State Pension and State Second Pension with a single lump-sum payment framework.

Online References

Suggested Books for Further Studies

  • Pensions Explained by James Banks & Claire Emes

    • Comprehensive guide to understanding UK pension systems, including historical and current perspectives.

  • Employment Law by Deborah Lockton

    • Detailed discussion on various employment laws, including benefits like SSP.

  • Finance Act Handbook by Steve Collings

    • In-depth explanation of various finance acts, including those impacting pensions and statutory benefits.

Accounting Basics: “SSP” Fundamentals Quiz

### What does SSP stand for in the context of employee benefits? - [x] Statutory Sick Pay - [ ] Social Security Plan - [ ] State Security Provision - [ ] Savings and Securities Plan > **Explanation:** In the context of employee benefits in the UK, SSP stands for Statutory Sick Pay, a benefit provided to employees who are unable to work due to illness. ### What condition must be met for an employee to qualify for Statutory Sick Pay? - [ ] They must be employed for at least one year. - [x] They must earn at least £123 per week. - [ ] They must work full-time. - [ ] They must be of pensionable age. > **Explanation:** To qualify for SSP, an employee must earn a minimum of £123 per week. ### For how long can an employee receive SSP? - [ ] 16 weeks - [ ] 20 weeks - [x] 28 weeks - [ ] 30 weeks > **Explanation:** SSP can be paid to an eligible employee for up to 28 weeks. ### SSP is paid by whom? - [ ] The Government - [x] The Employer - [ ] Insurance companies - [ ] Local authorities > **Explanation:** SSP is paid by the employer, who later claims back part of the SSP from HMRC. ### When did the State Second Pension get replaced? - [ ] April 2014 - [x] April 2016 - [ ] April 2018 - [ ] April 2020 > **Explanation:** The State Second Pension was replaced by a single-tier pension system in April 2016 for new retirees. ### What was the original name of the State Second Pension? - [ ] State Additional Pension - [x] SERPS (State Earnings Related Pension Scheme) - [ ] Workers' Pension Scheme - [ ] Government Pension Plan > **Explanation:** The State Second Pension was originally named SERPS (State Earnings Related Pension Scheme). ### What happens if an employee contracts out of the SSP? - [ ] They lose all state pension benefits. - [x] Contributions are redirected to an approved private pension scheme. - [ ] They must double their NICs. - [ ] They immediately receive a refund of contributions. > **Explanation:** Employees who contract out of SSP have their contributions redirected to an approved private pension scheme. ### What is necessary for SSP to be paid by the employer to the employee? - [ ] A formal letter from the government - [ ] Annual leave request - [ ] Absence due to work travel - [x] Absence due to illness for four or more consecutive days > **Explanation:** To receive SSP, the employee must be absent due to illness and must be off work for four or more consecutive days. ### Is it possible for an employee to receive both SSP and another form of statutory benefit simultaneously? - [ ] No, it is illegal. - [ ] Yes, with employer’s discretion. - [x] Yes, depending on other eligibility criteria. - [ ] Yes, without any other criteria. > **Explanation:** An employee might receive SSP alongside other benefits if they meet different sets of eligibility criteria for the benefits. ### After the replacement of SSP with the Single-Tier Pension in 2016, what should an employee do to understand their pension benefits? - [ ] Contact their local authority - [x] Review their retirement plan and contributions - [ ] Ignore as it does not affect them - [ ] Wait for a government notice > **Explanation:** Post-2016, employees should review their retirement plan and pension contributions to understand their benefits under the new Single-Tier Pension system.

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Tuesday, August 6, 2024
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State Second Pension (SSP) January 1, 1
Statutory Sick Pay (SSP) January 1, 1

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