Why was I not entitled to any of my late wife’s hard-earned pension money?
Scepticism is understandable given the £1bn underpayments scandal that came to light recently
QAMy late wife was born in May 1954 and passed away in Septeber 2018. She worked for the Inland Revenue for a few years after leaving school. Most of her later working life was looking after our children or part-time work. On her death I received a sum from the DWP. I enquired at the Inland Revenue and DWP what would happen to all her pension contributions. Because she died eight months before reaching retirement anything paid was forfeit. Therefore I only get my state and my company pension. Is it fair that the DWP can do this? Sorry you’ve had to grapple with the complexities of the pension system at an already difficult time.
The state pension was overhauled in 2016 with the introduction of the new "flatrate” state pension. This was designed to simplify things by merging the basic state pension (based on your record of National Insurance contributions) and additional state pension (a top-up to the basic state pension based on how much you earned) into a single payment. But the entitlement you built up under the old system still has a bearing on what you get under the new system.
The overhaul also extended to rules on inheriting the state pension. Under the old rules, people who don’t already get the full basic state pension (worth £141.85 a week in 202223) can use their late spouse or civil partner’s record of National
Insurance contributions to increase the amount they get.
This doesn’t apply under the new system, as the amount of state pension you get is based entirely on your own National Insurance record. However, in some circumstances it’s still possible to get an inheritance – and that includes cases like yours where a spouse has died before they reached state pension age.
As your wife was born after 5 April 1953, she would have been covered by the new state pension system (for men, the relevant date is 5 April 1951). To determine whether you’re entitled to inherit anything, the DWP would have considered how much state pension your wife would have been getting. If this is less than the full amount (£185.15 a week in 2022-23), you aren’t eligible for any inheritance.
Unfortunately the term "full amount” is confusing as many people will be getting more than this thanks to the additional state pension – known as the state earnings related pension scheme (Serps) or the state second pension.
If your wife’s state pension would have been more than the full level, then you would inherit half of the excess amount (known as a “protected payment”).
Because the DWP has not increased your state pension on the basis of your wife’s record, she must not have built up any additional state pension. The trouble is, it’s hard for you to know exactly how much state pension she would have been entitled to, so it’s hard to verify if the DWP’S decision is correct.
I wouldn’t blame you for being sceptical given the underpayments scandal that has recently come to light: an estimated 134,000 pensioners missed out on £1bn in state pension as a result of historical errors by the DWP.
The errors affect pensioners (mostly women) who started claiming their state pension under the old system – ie before April 2016. It includes those who weren’t entitled
to the full basic state pension because they had a limited National Insurance record, but who were entitled to extra payments – for example by inheriting these from their spouse.
While your situation is different, it’s clear that mistakes are possible.
Anyone who thinks they have been receiving less state pension than they should can
contact the Pensions Service directly at gov.uk/contact-pension-service or call 0800 731 0469.