When a loved one passes away, one of the biggest concerns for many is how they will manage financially. For married couples, a key question often revolves around the state pension and whether any of it will pass on to the surviving spouse. The rules, however, aren’t straightforward, with several factors influencing the outcome. The Daily Mail has a guide.
The Importance of Dates and Contributions
The amount of state pension you might inherit from your spouse hinges on several variables. These include whether the surviving partner is above or below the state pension age, the deceased spouse’s date of birth, and their National Insurance (NI) record. Crucially, the rules differ significantly depending on whether the state pension age was reached before or after April 2016.
Navigating Through Pre and Post-2016 Regulations
To get a handle on what you might be entitled to, the government has provided a state pension tool that takes into account your specific details. This can give you a tailored guide to what you could receive.
How the State Pension Operates
The state pension is a benefit for those with at least 10 years of qualifying National Insurance contributions, but you need 35 years to get the full new flat rate state pension introduced in April 2016. Prior to 2016, 30 years of contributions were necessary, with the possibility of higher amounts through S2P and Serps for additional contributions.
You can fill in gaps in your NI record or pay voluntary contributions to increase the number of qualifying years. Continuing to work and pay NI can also build up more years. And remember, deferring your state pension can increase the amount you get later on.
The Current State Pension Figures
As of now, the basic state pension stands at £156.20 per week, or about £8,120 a year. This can be augmented by additional entitlements earned during your working life. The newer ‘flat rate’ state pension, for those qualifying after April 2016, is £203.85 a week, or £10,600 a year.
Pre-2016 Rules for Inheritance
Those who reached the state pension age before April 6, 2016, fall under more generous rules. The possible inheritance depends on the deceased spouse’s National Insurance contributions and whether the survivor has remarried before reaching the state pension age.
For a basic state pension, provided the surviving spouse hasn’t maxed out their own entitlement and the deceased had a sufficient NI record, an increase to the full basic amount is possible. For additional state pension, the inherited amount ranges from 50-100% based on various factors, including the deceased’s date of birth.
Addressing Potential Underpayments
Following the revelation of a £1.2 billion scandal where many, particularly elderly widows, were underpaid their state pension, it’s vital to ensure you’ve received what you’re due. Steve Webb, a former Pensions Minister, has developed a tool to assist widows in discovering any underpayments.
Post-2016 Rules for Inheritance
For those reaching state pension age after April 2016, the rules tighten. Your state pension is generally based on your own NI record, and inheritance from a spouse is much more limited. If the deceased spouse had a full new state pension or less, there’s nothing to inherit. However, any ‘protected payment’ that’s over the full new state pension can be shared, with the surviving spouse entitled to half.
There are additional complexities when one spouse is covered by the old system and the other the new. In such cases, the surviving spouse can inherit certain portions of the additional state pension.
It’s clear that the state pension inheritance rules can be complex, and what you’re entitled to can vary widely. It’s crucial for surviving spouses to explore their options, potentially fill gaps in their NI record, and consult tools and resources to ensure they receive the full benefits they deserve.