Widow’s warning: Are you missing out on up to £11,000 in inherited state pension?
If your late spouse built up contributions under the old state pension, you could be entitled to inherit a portion of it. What are the rules and are you eligible?
Widows and widowers could be entitled to boost their state pension by thousands of pounds each year through inherited state pension benefits. The rules could apply to you if your late spouse reached (or would have reached) state pension age before 6 April 2016.
Last tax year, more than half a million surviving spouses boosted their state pension by over £5,000 under these rules, according to new figures obtained by Royal London through a Freedom of Information (FOI) request.
The current maximum you can inherit in the 2024/25 tax year is £11,365 per year, or £218.39 per week. This means some widows and widowers are receiving an enhanced state pension of up to £22,858 per year in total, according to Royal London, once their own entitlement is taken into account too.
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With inflation on the rise again, boosting your state pension is more important now than ever. The cost of retirement has already soared in recent years, creating particular challenges for single pensioners who are unable to split the cost of housing, bills and food with a partner.
The latest figures from the Pension and Lifetime Savings Association (PLSA) show a single pensioner now needs a minimum of £14,400 per year for a basic retirement. This rises to £31,300 for a moderate retirement, and £43,100 for a comfortable retirement. This doesn’t include housing costs, so you will need more than this if you are still renting or paying off a mortgage in retirement.
When it comes to inheriting your partner’s state pension benefits, the rules are complex and widely-misunderstood. As such, it is important that surviving spouses check their entitlement to avoid missing out.
How does the old state pension work?
Before delving into the rules on inherited state pension benefits, it is important to understand how the old state pension is structured. You fall under the old system if you are a man born before 6 April 1951, or a woman born before 6 April 1953.
The old state pension consists of various components. The main component is the basic state pension, which comes to £169.50 per week if you have a full National Insurance record.
On top of this, some people are entitled to an extra component known as the additional state pension. There is no fixed amount for the additional state pension. How much you receive depends on:
The length of time you paid National Insurance contributions
Your earnings
Whether you contracted out of the scheme
Whether you topped up your basic state pension (this was only possible between 12 October 2015 and 5 April 2017)
The additional state pension is paid into your bank account alongside your basic state pension.
Can you inherit your spouse’s basic state pension?
If you and your spouse both fall under the old system and your partner dies first, you could be entitled to receive more money each month in basic state pension. This will depend on your spouse’s National Insurance record, though. Furthermore, you will only receive the extra money if you haven’t already built up a full National Insurance record yourself.
There are some important caveats to bear in mind, though. If you are under the state pension age when your spouse dies, and you remarry before you reach state pension age, you will lose this right.
Can you inherit their additional state pension?
If you outlive your spouse, you could also be eligible to inherit some of their additional state pension, up to a current maximum of £11,356 (2024/25 tax year). This is in addition to any state pension you are entitled to in your own right.
The additional state pension is made up of three schemes:
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Timeframe
Scheme
Who contributed to the scheme?
Maximum a spouse or civil partner can inherit
1978 to 2002
State earnings-related pension scheme (SERPS)
You contributed if you were employed
If your spouse died before 6 October 2002, you can inherit up to 100% of their SERPS pension. If they died after this date, you can inherit between 50% and 100%, depending on your spouse’s date of birth. Further information can be found on the government website.
2002 to 2016
State second pension
You contributed if you were employed or claiming certain benefits
Up to 50%
12 October 2015 to 5 April 2017
State pension top up
You contributed if you reached state pension age before 6 April 2016 and opted in
Between 50% and 100%, depending on their date of birth
As a result of these inheritance rules, Royal London says some pensioners are currently receiving an enhanced state pension of up to £22,858 per year. This is enough to fund a basic retirement (£14,400 per year based on the PLSA figures) with almost £8,500 left over for further spending.
How many people are inheriting the additional state pension?
Royal London’s FOI request revealed that over two million pensioners received inherited state pension benefits through the state earnings-related pension scheme (SERPS) in 2023/24. Fifty percent of the group received £3,000 or more.
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Annual Inherited SERPS Payment
Number of Recipients
£0-999
483,880
£1,000-£1,999
268,080
£2,000-£2,999
263,760
£3,000-£3,999
256,180
£4,000-£4,999
213,780
£5,000-£5,999
176,400
£6,000-£6,999
140,180
£7,000-£7,999
101,760
£8,000-£8,999
66,420
£9,000-£9,999
39,540
£10,000+
17,460
Source: DWP data requested by Royal London via a freedom-of-information request, 2024.
“This data shows how much of a difference inheriting a SERPS pension from your husband, wife or civil partner can make,” said Sarah Pennells, Royal London’s consumer finance specialist.
“The worry is that, while more than two million people are claiming inherited SERPS, others could be missing out. Understanding the rules is key to boosting your retirement income,” she added.
Indeed, former pensions minister Sir Steve Webb has previously highlighted cases where pensioners have potentially missed out after being given incorrect information by DWP staff over the phone. For example, one misconception is that you cannot inherit the benefit if your partner died before reaching state pension age. This is incorrect.
Some people also believe that they cannot inherit their partner’s additional state pension (part of the old state pension) because they themself are on the new state pension. Again, this is not true.
It comes after the DWP previously admitted to errors which led to state pension underpayments for a number of groups, including widows. The DWP has been undergoing a correction exercise for three groups (married people, widowed people and the over-80s) since 2021. It has now reviewed over 850,000 cases overall, (including more than 445,000 for widows).
“Our priority is ensuring pensioners receive the dignity and security they deserve in retirement and that state pension underpayment rates remain as low as possible,” the DWP said. “We have now completed the vast majority of cases in the exercise as planned with a small number of outstanding cases due to further documentation needed from the customer.”
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Katie has a background in investment writing and is interested in everything to do with personal finance, politics, and investing. She enjoys translating complex topics into easy-to-understand stories to help people make the most of their money.
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Before joining the MoneyWeek team, Katie worked as an investment writer at Invesco, a global asset management firm. She joined the company as a graduate in 2019. While there, she wrote about the global economy, bond markets, alternative investments and UK equities.
Katie loves writing and studied English at the University of Cambridge. Outside of work, she enjoys going to the theatre, reading novels, travelling and trying new restaurants with friends.
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