Missold State Pension Top up?

jennifurroberts

Hi All,

I purchased a pension top up for my spouse. We spent ~£18K getting him £25 extra a week on his state pension. I am 25 years yournger than he and was told I would receive 90% of the extra £25 purchased (on top of whatever part of the state pension I was entitled to) if he should predecease me. It looked like a great deal. (The ~£18K would be save from the ravages of inflation, etc)...

I had assumed it would be at the point of widowhood. However, I have just discovered it would be when I qualified for my own pension. So there would be a hiatus between becoming a widow and receiving the inherited state pension.

This makes the purchase nowhere near the great deal we thought it was. If my spouse should die early or I should die before becoming a pensioner then it is a bad deal indeed.

We feel had we known I would only inherit at the point of becoming a pensioner and not the point of widowhood we would not have bothered with the purchase.

It was HMRC who actually sold the pension top up (via Class 3A Voluntary National Insuarance Contributions - NB: not Class 3 Voluntary National Insuarance Contributions).

HMRC did not make it clear to me nor did I ask when as the survivinng spouse I would get to inherit the additional state penison top ups. Should HMRC have told me? Should we have known/asked?

All in all, we would like to undo this purchase.

Do we have any remedy?

Any and all help appreciated.

Best wishes,

Jennifur

Silvertabby

To be fair, it probably didn't occur to HMRC to point out that you would only get this State pension top-up at State pension age. Granny, eggs and sucking springs to mind.

What private/occupational pensions does your husband have? Do they include widow's benefits? What about your own private/occupational pensions?

JezR

This Goverment explanatory document gave the following on inheritance:

Inheritance
Your State Pension top up may be inherited by your surviving spouse or civil partner in line with the arrangements for inheritance of additional State Pension under SERPS (additional State Pension built up before April 2002). This means that, in most cases, between 50% and 100% may be inherited, depending on your date of birth. The inherited top up will be payable immediately if your spouse or civil partner is already receiving their State Pension when they are widowed. If they are under State Pension age when you die and they are entitled to Widowed Parent's Allowance it will be paid as part of that benefit, or otherwise it will be payable when they get their State Pension.

mgdavid

HMRC are not an IFA, they didn't 'sell' you anything. They will have provided information in response to your questions perhaps, but the responsibility to check on all the surrounding issues which might pertain to your individual circumstances is yours alone. All the information you need is in the public domain - it just needs looking up.
https://www.nidirect.gov.uk/articles/inheriting-basic-state-pension

https://www.gov.uk/new-state-pension/inheriting-or-increasing-state-pension-from-a-spouse-or-civil-partner

etc

kidmugsy

Buy some insurance against your husband dying before your state pension begins. And stop trying to stick the taxpayer with the bill for your blunder.

Brynsam

jennifurroberts wrote: »

I had assumed....

That's the problem: you assumed, rather than establishing the facts. Up to you to do so - it's not for HMRC to ensure you understand what you're doing.

ermine

jennifurroberts wrote: »

Do we have any remedy?

Have you asked HMRC if they will refund the purchase given it doesn't meet your needs?

Alternatively, what you want is term life insurance on your partner to run between now and when you reach SP age, though it will cost more. Term life insurance is taken out between a fixed start date and a fixed end date, though you can usually stop paying the premiums before the end date, in which case the insured risk stops being insured.

This seems a classic case of not asking the right questions before you buy. It's not mis-selling, since you weren't advised.

Dox

ermine wrote: »

Have you asked HMRC if they will refund the purchase given it doesn't meet your needs?

I presume this comment is made in jest?

p00hsticks

Dox wrote: »

I presume this comment is made in jest?

Not quite the same situation, but I seem to recall more than one poster on this board who has recently bought additional NI (class 3) years in the mistaken belief that they would increase their state pensions, and have subsequently managed to get the purchase reversed by HMRC when they realised it would not.

Asghar

p00hsticks wrote: »

Not quite the same situation, but I seem to recall more than one poster on this board who has recently bought additional NI (class 3) years in the mistaken belief that they would increase their state pensions, and have subsequently managed to get the purchase reversed by HMRC when they realised it would not.

Yes, but in this case the State Pension has increased.
It's just the future widows entitlement to it that the poster mistook and was NOT mis-sold.

I presume that the spouse has already reached State Pension age, it would explain the £18K paid for an extra £25 per week.

xylophone

http://paullewismoney.blogspot.co.uk/2015/10/boost-your-pension.html