Scaled

What happens to my State Pension when I die?

Posted on: 25 May 2016 by James Hester

The new State Pension has been introduced for people who reach State Pension age on or after 6 April 2016.

State Pension changes 2016

The introduction of the new State Pension on 6 April 2016 brings clarity to a system that few people truly understand. The reforms will reduce pensioner means-testing and support saving for millions of people.

If you’ve paid National Insurance (NI) during your working life your partner could inherit some of your State Pension. What they may inherit will depend on whether you were married or in a civil partnership before 6 April 2016 and whether they or you reached State Pension age before or after that date.

Your spouse or civil partner will not be able to inherit your State Pension if they marry or form a new civil partnership before they reach State Pension age.

 

bullet

What your partner may inherit if they reach State Pension age on or after 6 April 2016


Inheriting additional State Pension

Provided your marriage or civil partnership began before 6 April 2016 your spouse or civil partner may be able to inherit the same proportion of your Additional State Pension as they would inherit under the old State Pension rules if you reached State Pension age before 6 April 2016.

Example: Sandra and Mark

As an illustrative example, Sandra reaches State Pension age in March 2017. She is entitled to a new State Pension of £130 a week, based on her own NI record. Sandra’s husband Mark reached State Pension age in July 2015. Mark is entitled to a full basic State Pension plus £30 a week Additional State Pension and £2 a week Graduated Retirement Benefit.

Mark dies in 2025. Sandra inherits half his Additional State Pension and Graduated Retirement Benefit. Sandra’s inherited State Pension of £16 a week is paid on top of her State Pension of £130 a week.

Inheriting Protected Payment

Your spouse or civil partner could inherit half your Protected Payment if your marriage or civil partnership started before 6 April 2016 and either of the following applies:

  • You reach State Pension age on or after 6 April 2016
  • You die under State Pension age on or after 6 April 2016

You will have a Protected Payment if your Starting Amount under the new scheme is more than the full rate of the new State Pension.

Example: Robert and Sarah

As an illustrative example, Robert reaches State Pension age in January 2018. His Starting Amount in April 2016 is £195.65 a week. This is made up of:

        £155.65 full new State Pension, and

        £40 Protected Payment

His wife Sarah reaches State Pension age in November 2020 and gets £140 a week of new State Pension based on her own National Insurance record.

They were married before 6 April 2016 and are still married when Robert dies in 2022. Therefore, Sarah gets half of his Protected Payment added to her new State Pension.

So from his death onwards she gets:

£140 + £20 = £160 a week

Inheriting extra State Pension or a lump-sum payment

If you had reached State Pension age before 6 April 2016 and were getting extra State Pension because you had put off claiming (deferred) your State Pension, your spouse or civil partner may inherit part or all of that extra amount.

If you are still deferring your State Pension when you die, your spouse or civil partner may be able to choose between inheriting an extra weekly amount or a one‐off, taxable lump‐sum payment if you had deferred for at least 12 months.

You may have built up the extra entitlement if you chose to delay claiming your State Pension when you reached State Pension age, or if you had claimed it, but later decided to stop claiming it for a while.

Your spouse or civil partner will not be able to inherit any deferral payment if they remarry or form a new civil partnership before they reach State Pension age.

If you had reached State Pension age on or after 6 April 2016 and you delayed claiming your new State Pension for at least 9 weeks, or decided to stop claiming it, you’ll normally get a higher weekly rate when you finally claim. (This doesn’t apply if you were getting another Social Security benefit while you had put off claiming your State Pension.) You won’t be able to choose a lump-sum payment from putting off claiming the new State Pension. Your extra State Pension from deferring your new State Pension cannot be paid to someone else after your death. If you die while you are still deferring your new State Pension your estate may be able to claim up to 3 months of your unclaimed new State Pension.

What your partner may inherit if they reach State Pension age before 6 April 2016 and you are in the new State Pension system

Provided your spouse or civil partner reached State Pension age before 6 April 2016, the old State Pension rules will continue to apply to them, even if you reach, or are due to reach, State Pension age on or after 6 April 2016.

This means that they will still be able to inherit half the Additional State Pension you built up before the start of the new State Pension, and half your Graduated Retirement Benefit.

If your spouse or civil partner doesn’t qualify for a full basic State Pension based on their own National Insurance contributions, the contributions you made for the period up to 5 April 2016 can also be used to increase their basic State Pension up to a maximum of the full rate.

However, if you had put off claiming your new State Pension, your spouse or civil partner won’t be able to inherit any of your extra State Pension from deferring.

 

Further information

To find out more about the changes to inheriting State Pension use this tool.

You can find out more about the State Pension at www.gov.uk/yourstatepension and www.youtube.com/pensiontube  

Share with friends



Rating:

You need to be signed in to rate.

Loading comments...Loader

Create your own user feedback survey

Phrase of the week

Discover more about the new State Pension with our daily glossary of common words and phrases.

Week starting Monday 23 May 2016

Qualifying year

A complete tax year during a person’s working life in which they paid, were treated as having paid or were credited with National Insurance contributions on earnings above the weekly ‘Lower Earnings Limit’ (£112 a week in 2016 to 2017).