Will you inherit any state pension from your husband or wife?

Many couples worry about how the surviving partner will cope financially if one of them dies.

One of the most frequently asked questions to our columnist Steve Webb is how much state pension a widower can expect.

There is no one-size-fits-all answer as it depends on when the surviving partner reaches or has passed state pension age and on the spouse’s date of birth and citizenship register.

If you reach or have yet to reach state pension age after April 2016, you will in any case receive much less generous benefits.

Below we explain the old pre-2016 and new rules for widowers. For a guide to what you could get, enter your details this AOW instrument created by the government.

How does the AOW work?

Anyone who builds a National Insurance record of at least 10 qualifying years qualifies for a certain amount of state pension.

You must have paid premiums for 35 years in order to receive the full new fixed AOW pension in April 2016.

This required you to have 30 years of eligible national insurance contributions, although this number and the rules have varied over the decades.

The state pension before 2016 was split into two brackets, the basic amount and an additional amount if you paid premiums via S2P and Serps.

You can fill gaps in the unpaid and/or underpaid national insurance schemes of previous years, voluntarily top up to buy additional waiting years and accrue more years if you have enough time between now and state pension age.

Everyone will have the option of deferring their state pension in order to receive more later. You can check your NI record here And get a state pension forecast here.

How much is the state pension now?

The basic pension is £156.20 per week or approximately £8,120 per annum. It is supplemented with additional AOW entitlements – S2P, Serps or AOW – if these have been accrued in working years.

The new ‘flat rate’ state pension introduced from 6 April 2016 is worth £203.85 per week or £10,600 per year if you qualify for the full amount.

People who have been outsourced to S2P and Serps over the years and retire after April 2016 will receive less than the full new state pension.

Even if you’ve paid in full for 35 years or more, it could still be less if you outsource it for several years.

What are the pre-2016 rules about inheriting state pension?

If you had reached state pension age before 6 April 2016, there were much broader rules for inheritance law than for people who are now retiring.

What you get depends on how much of a National Insurance record your spouse has accumulated.

You must also not have remarried before reaching state pension age.

Basic state pension: As long as you haven’t already maxed out your own AOW entitlements and your spouse has built up enough National Insurance himself – in other words, they didn’t pay the reduced married wife stamp – you’d get a raise, or even the full base £156.20 a week if your spouse had a complete file.

Supplementary AOW: You inherit 50-100 percent of this amount, depending on the date of birth of your deceased spouse.

The Gov.uk website page on supplementary state pension says: ‘If they died before October 6, 2002, you can inherit up to 100 percent of their Serps pension.

“If they died on or after October 6, 2002, the maximum amount of Serps and AOW supplement you can inherit depends on their date of birth.”

Please note: self-employed persons only built up an AOW base.

Also, many people were ‘outsourced’ to pay extra AOW during certain periods and their contributions went to their personal or work schemes, so that they would have accrued less or none of these extra AOW benefits.

Have you received too little state pension since you became a widower?

If you think you should have inherited your state pension from a deceased spouse, but didn’t, chances are you’re missing out.

An estimated 237,000 women – many of them elderly widows – have received underpaid state pensions in a £1.5bn scandal uncovered in 2020 by former Pensions Minister Steve Webb and This is Money.

We’ve reported many stories of women receiving payouts of tens of thousands of pounds, and a few cases of widows owing more than £100,000 after being deprived of the correct state pension through DWP errors.

Webb, now a partner at LCP, has a tool on his company’s webpage help widows find out if they have paid too little old age pension. The DWP’s contact details can be found here.

What can you inherit when you reach state pension age after 2016?

Under the new rules, your AOW is intended to be based on your own NI data, not your spouse’s.

What you may inherit from them is therefore much more limited if you reach or will reach the state pension age after April 2016.

This is especially the case if you both fall under the post-2016 rules.

If the spouse who dies becomes eligible for a full new state pension, currently worth £203.85 a week, or less than this, a surviving spouse will inherit nothing.

However, if the deceased spouse received more from old state pension accrued in the past, the excess is considered a ‘protected benefit’ and the surviving spouse receives half.

There are special rules if you have paid the married woman stamp and you have the Gov.uk inherits the state pension tool to find out more.

Meanwhile, if a surviving spouse is under the old system and their spouse is under the new, the former can fill gaps in his basic pension and inherit 50 percent of any supplemental state pension or serps the latter accrued before April 2016.

If the widower reaches statutory retirement age under the new system and his deceased spouse reaches the old one, the former will inherit 50-100 percent of their supplementary state pension or Serps (see table above), but not any of their basic state pension.

Go here to learn more about it what the government offers for grief counseling.