Rules around a widow/widower inheriting a state pension from a late wife, husband or civil partner are complex, with even the Department for Work and Pensions (DWP) getting calculations wrong.
In a bid to help people understand what state pension they’re entitled to inherit after the death of a spouse – and on top of their own state pension – Lane, Clark and Peacock (LCP) has developed a new tool to check.
The LCP Inheriting State Pension tool and guide come as Steve Webb, former Pensions Minister and current partner at LCP, revealed new errors on state pension claims.
But first, let’s turn to the historical errors plaguing widows and widowers…
Since 2021, the DWP has undertaken a correction exercise to fix previous state pension errors relating to three groups, including widows and widowers.
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As of 31 March 2024, over £280m had been paid in arrears to around 23,000 widows/widowers who had wrongly missed out on an inherited state pension from a late spouse or civil partner.
However, the correction exercise is set to run to the end of 2024, with the DWP estimating that over 50,000 widows/widowers could be owed £650m in total.
But this figure could be higher, as Webb has identified a new group of cases where the DWP appears to be making errors.
These are people claiming the new state pension who were already widowed when they retired.
Webb said he has recently been contacted by four separate people who had not been awarded any inherited state pension when they retired and had been incorrectly told by the DWP that they were not entitled.
They are now receiving an increased amount of state pension, as well as arrears.
Others may also be affected, with Webb giving these details to identify those who may be owed at the point when they claim their new state pension where either:
- The late spouse reached pension age before 6 April 2016
- The late spouse died before 6 April 2016
He explained that in this case, the widow or widower can potentially inherit at least 50% of any ‘additional state pension’ that the late spouse built up, plus 50% of any ‘Graduated Retirement Benefit’.
The exact amount of inherited state pension will depend on individual circumstances, but will be greater if:
- The late spouse was an employee (rather than self-employed) AND
- The widow/widower is not receiving a widow’s pension from a company pension scheme (as this may replace part of any inherited state pension due)
More generally, the amount of inherited state pension anyone is due can depend on things like:
- Whether the claimant comes under the old or new state pension system
- Whether the late spouse came under the old or new state pension system
- When the late spouse died
- Whether the late spouse was a member of a ‘contracted out’ occupational pension scheme
Webb said: “There seems to be a particular problem for people who are widows or widowers when they claim their state pension. In some cases, the DWP seems to have failed to automatically add any inherited state pension they were due from a late partner.
“These cases may well be the tip of an iceberg, with many thousands of people potentially underpaid. The department needs to launch an urgent investigation into the scale of this problem. In the meantime, I hope that our new online tool will help people to check what they are entitled to and to report any errors.”
A DWP spokesperson, said: “We want to ensure pensioners receive all the support to which they are entitled and have a tool to help them understand what state pension they can inherit.
“Delays can occur to a customer’s state pension award when not all the information we need is provided. In these cases, we will make a state pension award based on the customer’s own National Insurance record until we have the required information.
“Once we have the necessary documentation, we will then revise the customer’s claim as soon as possible.”
