Beware State Pension shock when partner dies

antonic

Thanks.

I appreciate your input !.

It has given me food for thought !.

hyubh wrote: »

Thanks. Strictly speaking, years and months no longer matter however - your Classic reckonable service isn't getting any bigger, and your Alpha benefits are simply determined by your pensionable pay during the year, not the year itself.



45 was the Classic cap. As you're now in Alpha, there is no cap. (Nuvos was/is the same.) What going at 67 will ensure is no actuarial reduction on your Alpha benefits, assuming your SPA doesn't rise in between (which I think you can be reasonably confident of).



Think about the effect on your pension however - between 60 and 67, the value of your Classic benefits will fall because you are past their NPA, you are unable to actually take them, and there is no actuarial increase to reflect the fact. Increasing your pay above inflation would counteract that, since it would increase the value of your Classic service when you do finally take the pension.

rdpeat

A similar thing applies to deferred state pensions. You could have forgone e.g. 6k of pension for each year of deferment. If your spouse predeceases you, in the worst case scenario that sum also falls back into the system.
Anyone who has deferred taking their state pension and is living as a couple should read the deferment rules carefully and consider what happens to their deferred state pension when they die, with particular respect to the order of death, whether they are married or in a civil partnership or just living together and whether or not they have officially 'claimed' (ended the deferment) at the time of their death. There are 2 sets of rules depending on your pensionable age. Complex because life and governments are varied and complex.
I never thought much about state pension until I became of pensionable age. I'm probably in the overwhelming majority in this respect. Not a good idea - ignorance is not bliss when it comes to your pension.

relishy57

No guarantees, unfortunately the worst can happen and all the spreadsheets in the world do not protect you unless you have planned for “what if one of us goes, much sooner”.
My husband passed away 3 months before his 66 th birthday so didn’t claim his SP for even a full year.
I find bills etc are manageable especially now children are not living at home. I knew I would be affected by the changes in the State Pension Age, and always saw myself as independent from his money not a dependent as my mother has been on my father working to provide for her.
The internet is a powerful tool within reason for finding out information. I am however continually shocked at friends/acquaintances in 50s, 60s who have no idea of State Pension forecasts etc and what their retirement age is.

OneInTheHat

cjdavies wrote: »

I got a mortgage on my home 10 years ago as a single person and still today living as a single person, the bills are not that bad alone.

You get 25% off council tax single person.

and that's about all you get. I am also single and planning for a retirement on my own and it's a fairly daunting task. Other than council tax, my household bills are the same. Food is the only other one that comes down on your own.

GibbsRule_No3

OneInTheHat wrote: »

and that's about all you get. I am also single and planning for a retirement on my own and it's a fairly daunting task. Other than council tax, my household bills are the same. Food is the only other one that comes down on your own.

Does food really come down on your own? I have always lived on my own, so get the 25% off Council Tax but pay full rent, electric for cooking, heating for a one bedroom place etc. TV licence. Phone/Internet. On one income/Pension. At least it is not coming as a shock to me though. Also don’t forget the holiday supplements if you go on holiday, not forgetting paying more for the room but it probably being worse than the double you had before.

relishy57

Main food saving for me is less meat to buy as I don’t eat lamb, steak etc. It’s also a bit of an unlooked for silver lining in that some days I will have something light to suit me without having to cook a full meal.
Ahh the dreaded single supplements on holidays! I have been on 2 cooking holidays in Italy which were very enjoyable and had no single supplements but were expensive to begin with.
I think my savings are going to take a nose dive for a lovely reason from late April onwards as my first grandchild is due then.

kidmugsy

OneInTheHat wrote: »

and that's about all you get. I am also single and planning for a retirement on my own and it's a fairly daunting task. Other than council tax, my household bills are the same. Food is the only other one that comes down on your own.

Get a water meter installed.

kidmugsy

GibbsRule_No3 wrote: »

pay full rent, electric for cooking, heating for a one bedroom place etc. TV licence. Phone/Internet. On one income/Pension.

If I were widowed I'd probably do without the TV licence. Come to that, I'd presumably sell the house and find something smaller with no stairs. More easily said than done, I imagine.

sammyjammy

badmemory wrote: »

Auto enrolment sounds good, but if people & employers only pay in the minimum, even if they start at 18 it will not be anywhere near enough to fund a decent retirement.

It's got to be better than the nothing many people have now (other than SP and Pension credit)? I think that the contribution level should be gradually increased. You can't suddenly introduce it with massive contribution rates.

sammyjammy

hyubh wrote: »

Think about the effect on your pension however - between 60 and 67, the value of your Classic benefits will fall because you are past their NPA, you are unable to actually take them, and there is no actuarial increase to reflect the fact. Increasing your pay above inflation would counteract that, since it would increase the value of your Classic service when you do finally take the pension.

Interesting. I consider myself quite knowledgeable on my CS Pension and I wasn't aware of this. I'll have to read up on it.


What bugs me is that if you take your Classic pension at 60 and want to continue to work you can only work part-time. This rule should not apply in my opinion due to the fact that it's two different pensions.


We either have to take our Classic pension at 60 and therefore reduce our level of Alpha pension or Leave the Classic pension to sit tight and wait 7 years with no benefit for not taking it in that time. Seems right.


I'm not really complaining though, I know how lucky I am.