On the go: A 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.
Although this should be picked up by the DWP, it seems that there is a chance the link might not be made
Sir Steve Webb, Royal London
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.
The DWP admitted, however, the absence of procedures to spot eligible individuals. The department said it only investigates if “we become aware”, and does not follow a proactive policy.
Sir Steve said the DWP should be spotting if individuals are missing out. “Although this should be picked up by the DWP, it seems that there is a chance the link might not be made.”
He urged surviving partners – whose spouses died before April 2016 before reaching retirement age – to take action and check for themselves.
“I would encourage anyone in this position to check that they have received an uplift, and to contact the Pension Service if they are unsure.”
