State pension inheritance: Steve Webb fears DWP blunders could impact thousands of survivors
People who become widows or widowers before the age of 66 are urged to take care not to miss out on any state pension they would inherit from their partner.
A worrying new pattern of errors discovered by This is Money columnist Steve Webb suggests some people could be disadvantaged if their deceased spouse reached retirement age before April 6, 2016, or died before that date.
The former pensions minister has called on the government to launch an urgent investigation after fearing the blunders were “the tip of the iceberg” and could have implications for thousands of survivors.
In the cases uncovered by Webb, Department for Work and Pensions staff provided false information to widows and widowers, telling them they were not entitled to a state pension.
The DWP has a history of serious missteps over state pensions, leaving many married women and widows, and both men and women over 80, underpaid by more than £1 billion in a scandal exposed by Webb and This is Money.
Webb, who is now a partner at pension consultancy LCP, has a free new tool on his company website to help widows and widowers who have received a state pension in recent years check that their payments are correct.
And he is calling on anyone who may be underpaid to contact him so he can investigate the matter further. Below you can read what you need to check and what information you need to send to Webb.
“After years of checking hundreds of thousands of historical state pension calculations for errors, you would hope that DWP would ensure that new claims are processed correctly,” Webb said.
‘But we have found worrying evidence that this is not the case. There appears to be a particular problem for people who are widowed or widowed when claiming their state pension.
‘In some cases it appears that DWP has not automatically added the inherited state pension from a deceased partner.’
Widow wrongly told she CANNOT inherit is entitled to £2,000 a year
Birgit Fischer (whose name we have changed) contacted This is Money because she does not receive an AOW pension, but wanted to know whether she was entitled to a benefit based on her late husband’s service record.
The 68-year-old former charity worker, who lives in the north of England, reached retirement age in 2021. Her husband died earlier this year at the age of 79.
When Mrs Fischer called the DWP, she was wrongly told that she could not inherit anything because she had no state pension of her own.
DWP must ensure frontline staff are better trained to stop providing such misleading information
Former Pensions Minister Steve Webb
This contradicted a letter the couple received a few years ago, which stated that she would inherit the state pension if he died before her.
After Webb raised the matter with the DWP, Mrs Fischer was awarded around £1,000 in arrears and is now entitled to more than £2,000 a year in state pension.
“What is particularly shocking is that Mrs. Fischer was told on the phone that because she had not contributed enough for a pension, she was also not entitled to her late husband’s heir,” Webb said.
‘This is simply not true and DWP must ensure that frontline staff are better trained to stop them spreading such misleading information.’
Webb has helped several other men and women who were wrongly told by the DWP, either by telephone or in writing, that they were not entitled to the succession of their deceased spouse.
However, he found that they were entitled to additional state pensions, which in some cases amounted to thousands of pounds a year, plus arrears for the period when they had not received proper payments.
Webb says: ‘These cases may be the tip of the iceberg, with thousands of people potentially being underpaid.
‘The DWP urgently needs to launch an investigation into the scale of this problem. In the meantime, I hope our new online tool will help people check what they are entitled to and report any errors.’
Can you inherit AOW after you turn 66?
If your deceased partner died before 6 April 2016 or reached state pension age before that date, you can inherit between 50 and 100 percent of his or her supplementary state pension (S2P or Serps), plus half of any accrued pension.
In the cases Webb found, this did not happen.
He says that every year, some 65,000 to 70,000 widows and widowers apply for their state pension.
This means that since the introduction of the new AOW in 2016, approximately half a million new applications have been submitted by people who were widows or widowers at the time of retirement.
Even if a small percentage gets it wrong, it could mean thousands of people are affected.
Webb says that the DWP has its own online tool for inheriting state pensions but it is confusing to use.
This is because you are taken to a page which says ‘you are not entitled to a pension based on your spouse’s contribution’ (i.e. the basic pension). Then as you scroll down it talks about your potential for an inherited second state pension or Serps.
The amount of State pension that can be inherited depends on individual circumstances. However, the amount may be higher if the deceased spouse was employed rather than self-employed, and if the surviving spouse does not receive a pension from an occupational pension scheme that can replace some of the benefits due.
It may also depend on whether the living spouse is covered by the old or new state pension scheme, whether the deceased spouse was covered by the old or new state pension scheme when he/she died and whether he/she was a member of an ‘outsourced’ company pension scheme.
When both spouses reach retirement age under the post-2016 system, there are limited inheritance rights. This is because the post-2016 system is based primarily on your own individual National Insurance record.
What does the DWP say?
“We want to ensure that pensioners get all the support they are entitled to and that they have a tool to help them determine how much state pension they could inherit,” a DWP spokesperson said.
‘There may be delays in the award of a customer’s State Pension if not all the information we need is provided.
‘In these cases we will award a state pension based on the customer’s national insurance details until we have the required information.
‘Once we have the necessary documentation, we will review the customer’s claim as soon as possible.’
The DWP has a tool here to help those receiving the new state pension – those who qualify from 6 April 2016 – assess whether they qualify for inherited amounts.
It also has a Here you will find a guide on how to inherit or increase a state pension.
Some links in this article may be affiliate links. If you click on them, we may earn a small commission. That helps us fund This Is Money and keep it free. We do not write articles to promote products. We do not allow commercial relationships to influence our editorial independence.