Inheriting Additional State Pension (and Graduated Retirement Benefit)

penny9

How do I calculate how much of my Dad’s Additional State Pension my Mum can inherit to receive with her own State Pension? 

Up until she was 60, she was receiving 65% of his Additional State Pension (and Basic SP) as a Widow’s Pension, since her Widows Parents Allowance ended when she was 50 (a 7% reduction per year under 55). From 60 to her SPa she has received 65% of just his Basic SP, as her own much higher COD was deducted from his Additional SP (so it became nothing), but the amount was detailed on the statement as being £38.57 (with a previous COD of £0.51) as what it would have been pre-COD. The Widow’s Pension stops entirely when she receives her own State Pension, but I think she can still inherit a portion of my Dad’s Additional SP?

Would his full Additional State Pension be £59.34 (since 65% of that is £38.57)? Then would my Mum inherit 50% of that, so around £29.67? Or would it be a completely different amount and/or percentage, please? 

What about Graduated Retirement Benefit? Is that something you can inherit a proportion of too? 

Thank you 

Brynsam

Without knowing their dates of birth, not possible to answer - but hopefully this very clear article will give you the necessary information: https://www.thisismoney.co.uk/money/pensions/article-6270261/Can-couples-inherit-state-pension-other.html

penny9

Brynsam said:

Without knowing their dates of birth, not possible to answer - but hopefully this very clear article will give you the necessary information: 

Thank you. 

In the article, both are on the old system, both have lived beyond their State Pension Age and the wife’s SP is based on her husband’s record of contributions, which isn’t the case for my parents, so I’m not quite sure how to compare. 

I’m sorry, I should have been clearer of the circumstances in my first post. 
 

My Dad would be on the old system (since he would have reached SPa before April 2016 if he’d still been alive) and my Mum is on the new system as she only reached SPa this month and will receive the New SP based on her own contribution record. 

My Dad was born after Oct 1945, so I think that means my Mum could inherit 50% of his Additional SP. All of my Dad’s ASP would be from Pre-1997 as he died before then. 

I’m not sure how to calculate the amounts. 

xylophone

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/181235/derived-inherited-entitlement.pdf
Page 12  may be relevant

a. Dependant reaches State Pension age in single tier
b. Contributor reaches State Pension age OR dies in the current system

penny9

xylophone said:

Page 12  may be relevant

a. Dependant reaches State Pension age in single tier
b. Contributor reaches State Pension age OR dies in the current system

Thank you. 

So it says my Mum could inherit half my Dad’s GRB (although I don’t know how much that is) and ‘up to 50% and 100%’ of ASP from before 2002 depending on when my Dad would have reached SPa. I think that would have been in 2014, so I’m guessing he’d be under the ‘up to 50%’ rather than anything higher (due to being born after 1945)? I’m not quite sure  how to tell if it would be 50% or something lower in the ‘up to’ range though? 

It also says the entitlement is contingent on entitlement to Widow’s Pension and widowed parent’s allowance prior to SPa and my Mum did receive both of those. 

It says the ASP is subject to an age related reduction if my Mum was under 55 when widowed or entitlement to CHB ceased, which she was for both. 

Does this mean the ASP could actually be linked to how much she was receiving via the Widow’s Pension, since this was reduced by 7% for every year under 55 once the WPA stopped? 

My Mum was 50 when she stopped receiving WPA, so from then on her Widow’s Pension was reduced from 100% to 65% of my Dad’s Pension (since 7x5 = 35%), of which £38.57 was the ASP. So could it be she’d inherit £38.57? Or could it be 50% of £38.57 instead? Or could it be 50% of £59.34 (the full ASP amount)? 

jem16

penny9 said:

xylophone said:

Page 12  may be relevant

a. Dependant reaches State Pension age in single tier
b. Contributor reaches State Pension age OR dies in the current system

Thank you. 

Does this mean the ASP could actually be linked to how much she was receiving via the Widow’s Pension, since this was reduced by 7% for every year under 55 once the WPA stopped? 

I believe how much was received from WP and WPA will make a difference to how much she now inherits but there is no clear way of working it out. If your Mum reached SPA on the 6th May she should have received a letter from the DWP advising her of exactly how much she will receive and also when her first and subsequent payments will be. Has she not received this letter?

xylophone

Has your mother not received a letter from DWP detailing how her pension is calculated?

The Graduated Pension Scheme was in force between 1961 and 1975 -  contributors built up units of Graduated Pension. According to 
The history of state pensions in the UK: 1948 to 2010, 

 the maximum possible number for someone who contributed for all possible years would be 86 units.

I think that each unit is now worth around 15p a week  - you can see that the extra amount your mother might receive is very small.

Your father was born in around 1949 so the maximum SERPS your mother could inherit would be half of his entitlement and it would appear from the link in my post above that  an age related reduction would be applied.

jem16

xylophone said:

Your father was born in around 1949 so the maximum SERPS your mother could inherit would be half of his entitlement and it would appear from the link in my post above that  an age related reduction would be applied.

As Dad died before 2002, then it would be 100% of SERPS that is inherited minus whatever reduction is applied due to receiving WP and WPA.

penny9

Thanks everyone for the replies. 

My Mum has received a letter advising how much she’ll receive, but it only states a total weekly figure, no breakdown to show how it’s been calculated. Presumably the total stated is both her own SP plus any inherited amount combined, as it’s higher than her own forecast was. She’s not sure how much higher the total is than her own SP though as it also doesn’t indicate whether it includes the extra she’s due from paying 4 years Class 3 contributions last month. 

The letter does say that if she’d like to know how her pension is made up then she can ring them for an explanation, so I think she might try that when they open next week. I was just trying to save her the trouble of calling (and them the phone call, because I know they’re extra busy at the moment), by attempting to work it out myself
  

xylophone

As Dad died before 2002, then it would be 100% of SERPS that is inherited minus whatever reduction is applied due to receiving WP and WPA.

 Thanks for this - I'm still unsure because  the link in previous does say

"The basic principle is that the Dependant will be entitled to an inherited amount, equivalent to the additional State Pension in the Category B pension they would have been entitled to, had the current system continued. The Dependant will also inherit half the deceased’s Graduated Retirement Benefit.

39.The inheritable additional State Pension in the Category B pension comprises:

• up to 50% of additional State Pension accrued since 2002 (under S2P).

• up to between 50% and 100% of additional State Pension accrued before 2002 (under SERPS) depending on when the Contributor reached, or would have reached, State Pension age. "

• And I saw this article - you will notice that the spouse in question died before 2002 and therefore could only have had SERPS (no S2P).

• https://www.thisismoney.co.uk/money/pensions/article-5782151/Should-inherited-husbands-state-pension.html
  

The  OP's father (contributor) would not have reached SPA until around 2014.

xylophone

https://forums.moneysavingexpert.com/discussion/comment/77173588/#Comment_77173588

My Mum has received a letter advising how much she’ll receive, but it only states a total weekly figure, no breakdown to show how it’s been calculated. 

Your post in the thread above indicates that as of 6.4.20 your mother's SP was £135.18 but that if she paid voluntary NI for the years 2016-20 inclusive this would increase to £155.21.

Each year she purchased would have added 1/35 x £175.20 to her forecast amount.

This accounts for the extra £20.03.

You  further indicate that she has been told that she will receive £173.82 - if this is the case, then inherited Grad/SERPS must account for the  amount in excess of £155.21 (£18.61)

You do not say when your father started work but presumably after 1966 - the Graduated scheme was only in existence up to 1975 - if your father managed to accrue say 40 units ( a little under 15p a unit) then perhaps £3.00 of the £18.61 would be inherited Grad.

The balance would be the inherited SERPS.