The state pension rules have changed in recent years, with the new state pension bearing differences to the former type – the basic state pension. The amount that a person gets will depend on not only the type of state pension that they’re able to claim, but also factors such as their National Insurance contributions. It may be possible to inherit a state pension payment upon being widowed. However, some will not be eligible as the rules changed in 2016, meaning that someone who is covered by the new state pension system may no longer inherit their spouse’s state pension when they die.
The gov.uk website states that what a person may inherit depend on when they reached, or would have reached, state pension age, as well as when the marriage or civil partnership began.
A person who remarries or forms a new civil partnership before reaching state pension age will not be able to inherit any of their late spouse or civil partner’s state pension.
It’s possible to work out whether one can inherit their late partner’s state pension by using a tool which is available on the Government website.
The “Your partner’s National Insurance record and your State Pension” tool – which at the time of writing was last updated on June 28, 2019 – requires the user to submit their marital status, when they will reach or reached state pension age, and their sex.
It will then detail how the rules apply to them, according to the individual’s circumstances.
Under the basic state pension guidance, Gov.uk advises readers to contact the Pension Service if their partner reached state pension age before April 6 2016 when they die – in order to find out what they can claim.
Royal London has made three recommendations for couples approaching or in retirement in order to help them deal with this potential financial matter.
Check where you stand
The pension experts advise looking into how much of any occupational or private pension income can be passed on to a partner when the other person dies.
When it comes to the state pension, Royal London also recommend ensuring that pensioners are aware of their state pension inheritance rights – such as by using the aforementioned government tool.
Take care with finances during retirement
“If it is possible to build up a savings buffer earlier in retirement this will help the surviving widow/widower to cope with the financial shock of bereavement,” Royal London said.
Consider a financial product which will offer a pay out
Royal London also suggested looking into whether a financial product such as life assurance or term assurance is a suitable option.
This may mean that should one person in the couple die, the other may receive a pay out – potentially helping with their living costs.