The United Kingdom provides old-age, survivors and disability protection through a two-tier social security benefit program.  The first-tier benefit, called the basic pension, is a contributory, non-earnings-related benefit payable to workers who meet the applicable eligibility standards, including a minimum coverage requirement.  Voluntary contribution is possible.  Benefit amounts are based on a maximum flat-rate amount that is prorated according to the number of years the person worked under the U.K. system.  Under the provisions of Chapter B, the United Kingdom will combine U.S. coverage with periods of U.K. coverage in order that persons who do not otherwise meet the minimum coverage requirements may become eligible for a partial basic pension.  NOTE:  As a result of the United Kingdom’s Welfare Reform Act of 2007, persons may qualify for U.K. basic pension with as little as one year of U.K. coverage.  Since the U.S. coverage of persons subject to the U.K. reforms is not required to help them qualify for U.K. basic pension, the United Kingdom no longer combines the U.S. and U.K. coverage of such persons in order to calculate a prorated U.K. basic pension.  From April 2011, the basic pension increases by the growth in average earnings, price increases, or 2.5%, whichever is highest. 

The second-tier benefit, or additional pension, (first called the State Earnings Related Pensions Scheme (SERPS), and then called the State Second Pension (S2P)) is both contributory and earnings-related.  The amount of the additional pension depends on the length of a worker’s employment as well as the level of his or her earnings.  An additional pension may be paid based on as little as one year of coverage.  Because of this immediate vesting, no provision has been made in the Agreement for totalizing U.K. and U.S. periods of coverage for purposes of establishing entitlement to an additional pension.  Both the basic and additional pension are adjusted annually to take account of changes in the cost of living in the United Kingdom.  The basic pension is indexed to changes in either wages or prices, whichever produces a higher benefit.  The additional pension is indexed to changes in prices.