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Inheriting the state pension: Steve Webb fears DWP mistakes could affect thousands of bereaved pensioners
People who are widowed before they turn 66 are being urged to check that they are not losing out on the state pension they should inherit from their spouse.
A worrying new pattern of errors spotted by This is Money columnist Steve Webb suggests some people could be disadvantaged if their late husbands or wives reached state pension age before 6 April 2016, or died before that date.
The former pensions minister has called on the government to launch an urgent inquiry into errors he fears are “the tip of an iceberg” that could affect many thousands of grieving pensioners.
In the cases uncovered by Webb, Department for Work and Pensions staff have given false information to widows and widowers, who were told they could not inherit the state pension.
The DWP has previously made major mistakes in state pensions which meant many married and widowed women, and both men and women over 80, were underpaid, totalling more than £1bn, in a scandal uncovered by Webb and This is Money.
Webb, who is now a partner at pension consultancy LCP, has launched a New free tool for your company website to help widows and widowers who started receiving a state pension in recent years to check that their payments are correct.
And he is asking anyone who may be underpaid to contact him so he can investigate further. Find out what you need to verify and what information you need to send to Webb below.
“Having had to spend years reviewing hundreds of thousands of historical state pension calculations for errors, you would expect the DWP to ensure new claims were handled correctly,” says Webb.
“But we have found worrying evidence that this is not the case. There appears to be a particular problem for widows and widowers when claiming their state pension.
‘In some cases, the DWP appears not to have automatically added any inherited state pension they were owed from their deceased partner.’
A widow who was wrongly told she could NOT inherit is owed £2,000 a year
Birgit Fischer (name changed) contacted This is Money because she does not receive a state pension but wanted to know if she was owed anything from her late husband’s record.
The 68-year-old former charity worker, who lives in the north of England, had reached state pension age in 2021. Her husband died earlier this year aged 79.
When Ms Fischer called the DWP she was wrongly told that as she did not have a state pension of her own she could not inherit anything.
The DWP must ensure that frontline staff are better trained to prevent them from spreading such misleading information.
Former Pensions Minister Steve Webb
This contradicted a letter the couple received several years ago explaining that she would inherit the state pension if he died before her.
After Webb raised the case with the DWP, Ms Fischer was paid around £1,000 in back pay and is owed more than £2,000 a year in state pension.
“What is particularly shocking is that Mrs Fischer was told over the phone that because she did not have sufficient contributions for a pension of her own, she was also not entitled to inherit anything from her late husband,” says Webb.
“This is simply untrue and the DWP must ensure that frontline staff are better trained to prevent them from spreading such misleading information.”
Webb has helped several other men and women who were wrongly told by the DWP over the phone or in writing that they were not entitled to inherit anything from their deceased spouse.
However, it found they were owed additional state pension amounting in some cases to thousands of pounds more a year, on top of arrears for the period they were denied correct payments.
Webb says: ‘These cases may be the tip of an iceberg, with thousands of people potentially underpaid.
“The DWP must launch an urgent investigation into the scale of this problem. In the meantime, I hope our new online tool will help people check what they are entitled to and report any errors.”
Can you inherit your state pension after you turn 66?
If your deceased spouse died before 6 April 2016 or reached state pension age before that date, you may inherit between 50 per cent and 100 per cent of their additional state pension (S2P or Serps) and half of any graduated retirement benefit.
In the cases Webb has encountered, this was not done.
According to his estimates, between 65,000 and 70,000 widows and widowers apply for their state pension each year.
This means that since the new state pension came into effect in 2016, around half a million new applications will have been submitted by people who were widowed on retirement.
So even if a small percentage is wrong, this could mean that many thousands are affected.
Webb says that The DWP has its own online tool for inheriting the state pension but it is confusing to use.
This is because you are taken to a page that says “you are not entitled to a pension based on your spouse’s contribution” (i.e. the basic pension), then if you scroll down it talks about your potential for a second inherited state pension or Serps.
The amount of state pension that can be inherited will depend on individual circumstances, but will be higher if the deceased spouse was employed rather than self-employed and the surviving spouse does not receive a pension from a company scheme that can replace some of what is owed.
It may also depend on whether the living spouse is covered by the old or new state pension system, whether the deceased spouse was, when he or she died, and whether he or she was a member of an “excluded” occupational pension scheme.
When both spouses reach retirement age under the post-2016 system, inheritance rights are limited, as the post-2016 system is based primarily on individual Social Security history.
What does the DWP say?
“We want to ensure that pensioners receive all the support they are entitled to and have a tool to help them understand what state pension they may inherit,” said a DWP spokesperson.
‘Delays in granting a client their state pension can occur if all the information we need is not provided.
‘In these cases, we will make the state pension award based on the client’s own National Insurance history until we have the required information.
“Once we have the necessary documentation, we will review the customer’s claim as soon as possible.”
The DWP has a Tool available here to help those in receipt of the new state pension. – those who qualify from April 6, 2016 onwards – evaluate their eligibility for the inherited amounts.
It also has a Guidance here on how to inherit or increase a state pension.
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