DWP Loophole Means You Could Inherit Deceased Spouses State Pension

A DWP loophole means some spouses who outlive their partners are eligible to inherit some of their state pension, the Department for Work and Pensions has said, in a revelation that could boost many pensioners' income.

Responding to a freedom of information request from Royal London, the DWP said 263,000 people are receiving an inherited state pension from a spouse who died before state pension age, despite the inheritance of state pensions ending in 2016.

But as the DWP’s data does not hold the partner information for everyone, the number of those eligible is likely to be far higher.

“It is highly likely that this [263,000 figure] is an under-estimate, and that the actual number of people in this position is higher,” the DWP said.

The inheritance relates to the now-defunct State Earnings-Related Pension Scheme, in place between 1978 and 2002, which was a contributory addition to the state pension and accrued via national insurance contributions.

Since April 2016, partners no longer inherit their deceased spouse’s state pension if they die before hitting state retirement age.

But if individuals died before April 2016 without reaching retirement age, their widow, widower or surviving civil partner would be eligible to inherit some of their SERPS.

Sir Steve Webb, Royal London’s director of policy, said surviving partners could receive a pensions dividend.

“In principle, as long as the surviving spouse does not remarry, he or she can potentially get a higher state pension in respect of their late spouse’s contributions,” he said.

Eligibility – according to the government

You reached State Pension age on or after 6 April 2016

You won’t get the Additional State Pension if you reached State Pension age on or after 6 April 2016. You’ll get the new State Pension.

You reached State Pension age before 6 April 2016

If you reached State Pension age before 6 April 2016 and started claiming the basic State Pension, you’ll automatically get any Additional State Pension you’re eligible for. There is no need to make a separate claim.

You may not get any Additional State Pension for periods when you were contracted out of it.

ABC Note, this is well worth looking into and it could give some pensioners a welcome boost financially. 

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