I deferred my state pension. How will it affect benefits for me and my wife?

21 February 2020

Q

In October 2015 I became eligible to claim my state pension, but deferred taking it. Now after four years I am considering the options of taking the lump sum or the extra weekly pension. 

What I have not been able to establish is what percentage of the extra pension gained by deferment my wife will be able to inherit should I predecease her after I start receiving it. The online DWP information suggests it will be 100% of the extra pension, but this is not clear enough for me to make a final decision.

I’m sure you will appreciate that as with any other pension or annuity arrangement, it is important to know the full benefits for me and those that will continue for my wife. Inheriting the extra pension in full changes the options significantly.    

I have written to the DWP on two occasions in 2018 and 2019 requesting clarification, but without reply. Can you resolve this query?

From
TB/via email

A

The rules for inheriting pensions depends on whether you became eligible for the state pension under the old system (before April 2016) or the new system (from 6 April 2016).

As you reached state pension age in October 2015, the old rules will apply to you. This means your wife should be eligible to inherit 100% of your extra state pension if you start claiming it.

If you die before you start claiming your state pension your wife will inherit the lump sum.

For people who reach state pension age after April 2016, the state pension will normally be based on the individual’s own National Insurance contributions only.

The only exceptions are if the individual chose not to pay Class 2 National Insurance contributions or if the married women’s reduced rate was elected. A widow may inherit half of their Protected Payment if they were married or in a civil partnership before 6 April 2016.

Michelle Cracknell is the former chief executive of the Pensions Advisory Service

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