Many couples worry about how the surviving spouse will cope financially when one of them dies.
One of the most frequently asked questions to our columnist Steve Webb is how much state pension a widowed couple can expect to receive.
There is no clear answer, as it depends on when the surviving partner reaches or has passed state pension age and their spouse’s date of birth and their social security record.
What you could get, if anything, is much less generous if you reached or are yet to reach state pension age after April 2016.
Below we explain the old pre-2016 rules and the new ones for widows. For a guide on what you could get, you can enter your details at this state pension tool created by the Government.
Will you inherit any state pension from your husband or wife after your death?
How does the state pension work?
Anyone who builds up a national insurance history of at least 10 qualifying years is entitled to a state pension of a certain amount.
It is necessary to have 35 years of contributions to obtain the new fixed rate state pension launched in April 2016.
Before that, it was necessary to have 30 years of qualifying National Insurance contributions, although this number and the rules varied over previous decades.
The state pension before 2016 was divided into two levels: the basic level plus an additional sum if you paid further contributions through S2P and Serps.
You can cover gaps in unpaid or underpaid National Insurance in previous years, make voluntary top-ups to buy additional qualifying years and build up more years paying NI while continuing to work.
How much is the state pension now?
The basic state pension is £156.20 a week or around £8,120 a year. It is supplemented by additional state pension entitlements (S2P, Serps or phased retirement benefit) if they were earned during years of work.
The new ‘flat rate’ state pension introduced from 6 April 2016 is worth £203.85 per week or £10,600 per year if you qualify for the full amount.
People who have taken out S2P and Serps over the years and retire after April 2016 receive less than the new full state pension.
Even if you paid in full for 35 years or more, if you contracted for a few years, you could still reduce what you get.
Steve Webb on inheriting a state pension
What are the pre-2016 rules on inheriting a state pension?
If state pension age was reached before April 6, 2016, much more generous rules applied to inheritance payments than for people retiring now.
What you get depends on how much National Insurance record your spouse has built up.
It is also necessary not to have remarried before the state pension age.
Basic state pension: As long as you have not already reached the maximum limit of your state pension entitlement and your spouse has built up enough national insurance in her own right – in other words, she was not paying the reduced married women’s stamp – you would get an increase, or even salary Full basic £156.20 per week.
Additional state pension: Of this amount you inherit between 50 and 100 percent, depending on your deceased spouse’s date of birth.
He The Gov.uk website page on additional state pensions says: ‘If they died before October 6, 2002, they can inherit up to 100 per cent of their Serps pension.
“If they died on or after 6 October 2002, the maximum Serps pension and state pension supplement that can be inherited depends on their date of birth.”
Please note that self-employed people only accrued a basic state pension.
Furthermore, many people were “contracted” to pay additional state pensions for periods, and their contributions went into their private or workplace plans, so they would have earned less or none from these additional state pension payments.
Have you been paid an insufficient state pension since you became widowed?
If you think you should have inherited your late spouse’s state pension and you didn’t, there is a chance you may have missed out.
An estimated 237,000 women, including many elderly widows, have received an insufficient state pension in a £1.2bn scandal uncovered by former Pensions Minister Steve Webb and This is Money in 2020.
We have reported many stories of women receiving payments of tens of thousands of pounds, and a couple of cases of widows being owed more than £100,000, after being deprived of the correct state pension due to errors from the DWP.
STEVE WEBB ANSWERS YOUR QUESTIONS ABOUT PENSIONS
Webb, now a partner at LCP, has a tool on his company’s website to Help widows find out if they received an insufficient state pension. He DWP contact details are here.
What can you inherit if you reach state pension age after 2016?
Under the new rules, your state pension must be based on your own NI record, not your spouse’s.
So what you could inherit from them, if anything, is much more limited if you reached or are yet to reach state pension age after April 2016.
This is especially the case if you are both subject to the post-2016 rules.
If the dying spouse qualifies for a new full state pension, currently worth £203.85 a week, or less, the surviving spouse will inherit nothing.
However, if the deceased spouse received more than this due to an additional state pension accrued in the past, the excess is considered a “sheltered payment” and the surviving spouse receives half.
There are special rules if you paid for the married woman stamp and can use the Gov.uk inherits the state pensions tool for more information.
Meanwhile, if a surviving spouse takes advantage of the old system and their spouse takes advantage of the new one, the former can cover the gaps in their basic state pension and inherit 50 per cent of any additional state pension or Serps that the latter has accrued before April of 2016.
If the widowed spouse reaches state pension age under the new system and his or her deceased spouse reaches the old age, the former would inherit between 50 and 100 percent of the latter’s additional state pension or Serps (see table above), but not part of your basic state pension. pension.
You can still receive an increase in your state pension thanks to the contributions of a deceased husband or wife, even if they unfortunately did not live to collect a pension. This will be paid when you reach state pension age.
Go here for details of what the Government provides in grief support.
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