I wonder if you could clear up a question for me. I am 64 years old and don’t get my state pension until I am 66.
My late husband worked in the fire service for over 30 years until he retired at the age of 50.
He died in 2015 at the age of 58 and I was told I was entitled to part of his state pension, but the Government changed that in 2016.
Retirement finances: Will I inherit my late husband’s state pension? (Stock image)
Will I still be entitled to my late husband’s state pension or have I also been cheated out of that the way I have been cheated out of my state pension? Look forward to hearing from you.
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Steve Webb replies: The rules around inheriting state pension from a late spouse are complex and did indeed change in 2016.
However, you may still receive something in respect of your late husband’s contributions when you reach pension age, even though you come under the new system.
The major change in the new state pension is that each individual is assessed for state pension largely on the basis of their own record of National Insurance contributions and credits.
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Most of the complexity, where married women could claim a higher basic state pension on the basis of the contributions of a husband, ex-husband or late husband, has been removed.
However, it was felt that abolishing all forms of inherited pension overnight would have been unfair, not least because people had been making financial plans on the assumption that their widow (or widower) would receive something when they died.
From what you have told me, your husband would have built up two sorts of pension.
The first, and probably by far the most important, would be the firefighter’s pension that he received when he retired. As his widow, I would assume that you have rights under that scheme.
The second would be his state pension. The part that is relevant for inheritance is the ‘additional’ pension, commonly known as SERPS (the state earnings-related pension scheme).
In general, a widow can inherit at least 50 per cent of her late husband’s SERPS pension once she has reached state pension age. The exact percentage depends on her late husband’s date of birth, and in your husband’s case, it would be 50 per cent.
It would be fair to say that your late husband is unlikely to have built up much in the way of a SERPS pension.
This is because he would (presumably) have been a member of the Firefighters’ Pension Scheme and this was ‘contracted out’ of SERPS.
STEVE WEBB ANSWERS YOUR PENSION QUESTIONS
Put simply, he and his employer paid a reduced rate of NI contributions and in return the firefighters’ scheme undertook to replace the earnings-related part of his state pension.
For the years he was contracted out, he would probably have built up little or no SERPS pension.
However, people do not always join the pension scheme as soon as they start work, so it is possible that he had a period before he joined the firefighters’ scheme when he might have built up a small amount of SERPS pension.
He may also have done some paid work post-retirement on which NI contributions were paid and which would have accrued some additional state pension.
In summary, your main pension inherited from your late husband is likely to be the pension you receive from the fire service, but if he did have a small amount of SERPS pension then you would get half of this when you reach pension age.
I should add that I receive a large number of queries about the rules for inheriting state pensions, and those rules are made more complex by the changes made in 2016.
A lot depends on whether each spouse or civil partner reached pension age (or was due to reach pension age) before or after 6 April 2016.
It is hard to find a clear explanation of all of this, but one of the most helpful government documents which goes through the different permutations can be found here.
Note that this document was published in 2013 and at time of publication it was assumed that the new state pension system would be introduced in 2017.
A more up-to-date tool for working out what you can get is now available on the government website here.
Ask Steve Webb a pension question
Former Pensions Minister Steve Webb is This Is Money’s Agony Uncle.
He is ready to answer your questions, whether you are still saving, in the process of stopping work, or juggling your finances in retirement.
Steve left the Department of Work and Pensions after the May 2015 election. He is now a partner at actuary and consulting firm Lane Clark & Peacock.
If you would like to ask Steve a question about pensions, please email him at firstname.lastname@example.org.
Steve will do his best to reply to your message in a forthcoming column, but he won’t be able to answer everyone or correspond privately with readers. Nothing in his replies constitutes regulated financial advice. Published questions are sometimes edited for brevity or other reasons.
Please include a daytime contact number with your message – this will be kept confidential and not used for marketing purposes.
If Steve is unable to answer your question, you can also contact The Pensions Advisory Service, a Government-backed organisation which gives free help to the public. TPAS can be found here and its number is 0800 011 3797.
Steve receives many questions about state pension forecasts and COPE – the Contracted Out Pension Equivalent. If you are writing to Steve on this topic, he responds to a typical reader question here. It includes links to Steve’s several earlier columns about state pension forecasts and contracting out, which might be helpful.