Six important pension questions answered by Steve Webb this year

Former Pensions Secretary Steve Webb is This is Money's popular uncle.

His columns are 'view by appointment' for many readers who come to read them first thing every Monday morning.

Steve is now a partner at pensions adviser LCP, where he focuses on occupational pension issues, but remains an unrivaled expert on state pensions following his five-year stint in government.

This makes him invaluable to readers who are often baffled by the complexities of the state pension – or simply can't reach who can help at the Department for Work and Pensions.

Many readers have reported jammed phone lines at the DWP this year, especially anyone trying to take advantage of a special offer on state pension top-ups, telling us that letters and even formal complaints are going unanswered.

To help you, we've put together a roundup of Steve's state pension columns, split into twelve topics, including outsourcing, inheriting from a spouse and buying top-ups.

This is a great resource for people looking for answers to the most common questions Steve gets about the state pension.

Avid readers can also find a list of all of Steve Webb's previous retirement columns here, with the most recent at the top.

Since it's now 400 columns, this is harder to navigate, but try going to that web page and pressing 'control F' ('command F' on a Mac) and typing in a few keywords to find out if Steve has already done a column about what you want to know.

However, he still gets questions about new and emerging issues, and is always ready to re-discuss an evergreen topic for any reader who needs help.

Below we have selected some of his best columns of 2023. Do you have something you'd like to ask Steve? Then scroll down and discover how you can submit your own pension question.

Topping up the state pension became big news this year thanks to a special concession that allows people to fill gaps going back another ten years – all the way to 2006.

The government failed to provide a fully predictable rush before the April deadline, and the phone lines of DWP and HMRC – which run the cumbersome system between them – were overwhelmed.

The deadline was ultimately postponed twice (it is now April 2025), but large numbers of readers are still reporting major delays in processing their payments.

A promised new online AOW supplement service could help, but this will not arrive until the spring.

We've been trying to help readers whose payments have been missing in the top-up system for months or even years.

But we also often hear from those who are frustrated that they haven't gotten past the first step of getting basic data from the DWP on which years their state pension will increase.

This is vital information and the Government is warning people not to make payments without contacting them first.

To help, Steve runs one top-up guide on the website of his company LCP (which is free and does not store any private data).

The column linked above checks whether you can still supplement your pension after reaching the state pension age.

Steve says there is no reason in principle why you can't do this, provided you are under the 'new' state pension scheme and have reached retirement age on or after April 6, 2016, but the process for topping up is slightly otherwise.

The nominal state pension rate is £10,600 per year, and will rise to around £11,500 next April. The personal allowance, the threshold at which you start paying income tax, is £12,570 and has been frozen until 2027/2028.

This means that many more retirees will be faced with income tax bills in the future.

Steve explains in this column how this will also impact those who use the 'marriage allowance' scheme transfer an unused 10 percent of the personal allowance to a spouse or registered partner who pays tax at the basic rate.

'If and when your total income exceeds £12,570 you will no longer be eligible for marriage benefit as this requires you to have an income less than the full personal allowance,' he says.

'Please note that the marriage benefit continues automatically unless you cancel it, or unless you have an income that exceeds the full personal allowance.'

Steve Webb had some harsh words for the DWP in this case. He condemned the “scandalous” treatment of a widow who was caught out by baffling rules that no ordinary person could be expected to understand.

According to him, the staff, whose job it was to know these rules, failed a grieving lady, who therefore missed out on the state pension she should have received.

It is now too late to correct this.

“A humane organization would have processes in place to ensure widows got their due, even if they had previously missed out,” says Steve.

People with a final salary pension who want to switch receive far fewer offers from schemes.

This is because higher interest rates mean it is no longer as expensive to pay for these valuable pensions, meaning schemes do not return as much when people leave.

Savers who stay with their scheme will not be affected – they will continue to receive their guaranteed income for life as before – only those who want to leave and transfer their pension to an investment scheme.

This situation upset one reader whose transfer offer had halved to just over £300,000, and felt his pension scheme should have done more to warn people that previously high transfer values ​​could fall significantly in the future.

“In my opinion there is massive negligence within the pension funds,” he wrote to Steve. 'No one had any idea how strongly the fund values ​​were biased towards interest rate increases.

'Why did the pension fund not have a duty to warn me in clear and unambiguous language about the underlying financing mechanisms of my fund, and how these were so negatively linked to interest rate increases?'

Steve disagreed, pointing out that the primary role of the pension fund trustees is to ensure that pensions are paid in accordance with the rules, and it did not appear that they had failed in this duty.

“The ability to transfer under 'pension freedoms' and enjoy extended flexibility after a transfer only started in April 2015,” he said.

“Your pension plan was probably in place for decades before that date, with the primary goal of providing all participants with a guaranteed income upon retirement.”

Steve questioned whether a scheme could be found guilty of mismanagement because it had failed to indicate how possible future changes in interest rates could affect transfer offers.

'The plan clearly could not speculate on the future trajectory of transfer values, and any 'cash equivalent transfer value' is quoted on a time-limited basis precisely because market conditions can and do change.'

The higher interest rates have also led to a recovery of annuity contracts.

Annuities provide a guaranteed income for life for people who are not in a generous final salary plan.

Most employees outside the public sector now save for pensions where they bear the investment risk themselves.

They reach retirement age with a pot of money that they need to convert into income, either by buying an annuity or by keeping their fund invested and drawing from it in old age.

Poor annuity deals meant most opted to stay invested, but these deals have now improved.

A reader who had been investing his fund with good results for the past six years asked Steve if he should consider an annuity now that he was turning 70. Steve discussed what to consider when making this important decision.

Steve Webb intervened with HMRC and the DWP and secured £17,000 back payments and a state pension increase of £30 per week for our reader.

She had spent part of her working life at home raising her family, and her state pension was low due to errors that left Home Responsibilities Protection missing for many women in the administration.

“It is completely unacceptable that you have clearly been receiving an underpaid state pension for the past 15 years and that you now have to wait months to resolve this,” Steve told this reader.

The government has now launched a letter-writing campaign to identify people affected by the £1 billion blunder HMRC has an HRP web tool you can use to solve it.