Inheriting Additional State Pension (and Graduated Retirement Benefit)

penny9

Yes, I’m not sure if the inherited element is £18.61 or £38.64, as when paying the voluntary contributions they said the additional £20.03 might not be added in time for the first payment, but could be backdated later as a lump sum instead.

I know that 65% of my Dad’s SERPS is £38.57 (because it’s stated on this year Widow’s Pension statement) which would presumably make the full SERPS £59.34, but 50% of either of those figures would both be higher than £18.61, so it would have to be a lesser percentage than 50%? Or I thought perhaps maybe the £173.82 didn’t yet include the extra £20.03 for the voluntary contributions, so the difference could be £173.82 - 135.18 = £38.64 which is very close to £38.57 (65% of SERPS from the WP reduction), but that’s possibly just by coincidence....

With a difference of 7p could he have had just 1 unit of Grad? That seems low - he did work from his teens onwards, but I guess he might not have accrued units for all that time. I’d have to see if my Mum has any paperwork for that time. 

xylophone

With a difference of 7p could he have had just 1 unit of Grad? 

It seems unlikely - by way of comparison, relative who started work in 1968  (with non contributory Final Salary DB pension) and started to receive state pension in 2013  has a Grad of £6.19 a week.

That said, the current value of a unit of Grad  ( I looked it up) is 14.40p, so 7p is the rounded down value of 1 unit.

On that basis, if the voluntary contributions have not yet been added to your mother's record and your father did have only one unit of Grad, then the  figures would indicate 65% of your father's SERPS as before plus 7p.

This would indicate (see https://forums.moneysavingexpert.com/discussion/comment/77178986/#Comment_77178986)

that Jem is right and the fact that your father died before 2002 means that your mother inherits 100% SERPS  only reduced by the WP reduction which is the same as before (making his date of birth irrelevant to the calculation)?

 This would make the SP £155.21 + £38.57 + £0.07.

Your mother will need to ask DWP for the calculation.

jem16

xylophone said:

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

Sorry xylophone as I’ve only just seen this. Anyone whose husband died pre April 2002 is definitely able to inherit 100% of SERPS. This was the big change that the Tories brought in in 1986 and was due to begin in 2000 but was postponed to 2002 due to them not advertising it well enough. The phasing down to 50% was to take place over the period 2002 to 2010. Full details here. 

http://researchbriefings.files.parliament.uk/documents/CBP-7631/CBP-7631.pdf

As to Steve Webb’s answer I’ve noticed he’s been getting quite a bit wrong lately. One of his recent article is about a tool he’s devised to let married women check their state pension entitlement to make sure it had increased to the full 60% Category B Pension once their husband reached SPA. He says it only applies to women who reached SPA before April 2016. This is of course wrong as any woman who paid the Married Woman’s Reduced rate in the last 35 years has protection under the transitional arrangements and will still be entitled to a Category B Pension post April 2016. 

jem16

penny9 said:

Yes, I’m not sure if the inherited element is £18.61 or £38.64, as when paying the voluntary contributions they said the additional £20.03 might not be added in time for the first payment, but could be backdated later as a lump sum instead.

I’d say it was pretty certain that your 4 years of NICs has not been included yet as it takes a while for the info to get from HMRC through to the DWP. There have been other posts on people waiting months for the extra payments to be included. 

xylophone

Sorry xylophone as I’ve only just seen this. Anyone whose husband died pre April 2002 is definitely able to inherit 100% of SERPS. 

Many thanks - I had read ( and read again!) the various clauses/gov pages /the Steve Webb comment and was still unsure! Your clarification is very welcome.

jem16

xylophone said:

Sorry xylophone as I’ve only just seen this. Anyone whose husband died pre April 2002 is definitely able to inherit 100% of SERPS. 

Many thanks - I had read ( and read again!) the various clauses/gov pages /the Steve Webb comment and was still unsure! Your clarification is very welcome.

I've just been having an email chat with Steve Webb - initially about his tool for Married Women's pensions - but took the opportunity to ask about the inherited SERPS and his article. He has conceded that I am "almost certainly" correct and that he's now talking to This is Money to see whether/how they should amend that article.

I've just asked him about the reduction of 7%pa that the OP mentioned as Mum was in receipt of WPA which ended when she was 50. As my WPA ended when I was 48 I'd like to know if this is correct. I have been told exactly how much SERPS I should inherit but I don't know if that figure includes the reduction or not. You would think it should but I'm not totally convinced.

penny9

Thank you again for all the further replies  

My Mum rang the number they gave on the statement for asking what the weekly pension amount is made up of, but the person who answered just read out, verbatim, what the letter says and when asked about the breakdown/calculation, he just said the amount was based on my Mum’s NI record. Since it can’t be that alone, she asked about whether a portion was inherited (and/or whether it included the additional amount from the voluntary contributions) and he said he didn’t have access to any other information, but he could request a letter to be sent out. So now she awaits a letter instead - he said to allow 28 working days. He wasn’t clear what exactly the letter would show, but hopefully it will clarify things! 

penny9

Unfortunately a letter never arrived, so my Mum is going to try requesting one again, but hasn’t got around to it yet. 

I did have some further ideas recently when I took another look. 

I hadn’t considered my Dad’s COD in the calculations and including that would allow for a higher number of units of Grad. 

My Dad’s COD was always listed on the Widow’s Pension Statement as £0.51 so adding that in would be....

£173.82 - £135.18 - £38.57 + £0.51 = £0.58 

If 8 units of Grad is £1.152 then 50% is £0.58 (rounded), so while 8 units of Grad still seems low, it is slightly more realistic than just 1 unit of Grad (as calculated without including the COD). 

I did wonder something else though....

My Dad’s COD has always been listed as £0.51 on the Widow’s Pension Statement calculation, right from the year after he died all the way until it was replaced by my Mum’s own COD in the calculations from 2015 onwards (due to her then being 60 or over). COD usually increases each year even after you’ve stopped being contracted out (my Mum’s still does), but my Dad’s stayed frozen at that same amount for 16 years. So I wondered would it still be frozen at £0.51 now or would it have been increased to what it would be now if it had increased year on year? 

For example, if it was actually now £1.51 instead of £0.51 then he could have had 22 units of Grad as 22 x 0.144 = 3.168 and 50% of £3.168 is £1.58 (rounded) meaning: 

£135.18 + £38.57 - £1.51 + £1.58 = £173.82

That’s a complete stab in the dark though, as I have no idea if my Dad’s COD should have increased from £0.51 after all these years or if it is supposed to stay frozen at the 1989 rate? I thought maybe it originally stayed frozen if my Mum had received a lump sum in 1988/9 from the contracted out pension it had contributed to, but I’m not sure if it makes sense for it to have increased now instead. If he was still alive it would have gone up each year (even if he’d completely stopped being contracted out) and would now be a larger amount being deducted from his pension that he was claiming himself, so maybe it does make sense. I’m just thinking out loud now...it’s too late at night to get my head around!  

xylophone

If your all  father's COD related to pre 1988, it is quite possible that it stays the same.

Someone I know has the old rules state pension and a COD related to a DB pension from employment between 1974 and 1982 - the COD was £24.06 when the SP commenced back in 2010 and is the same now. 

What changes is the figure for pre 97 Additional State Pension (which increases annually  with inflation).

The one is deducted from the other thus the increase on pre 88 GMP is paid with the state pension.

penny9

xylophone said:

If your all  father's COD related to pre 1988, it is quite possible that it stays the same.

Someone I know has the old rules state pension and a COD related to a DB pension from employment between 1974 and 1982 - the COD was £24.06 when the SP commenced back in 2010 and is the same now. 

What changes is the figure for pre 97 Additional State Pension (which increases annually  with inflation).

The one is deducted from the other thus the increase on pre 88 GMP is paid with the state pension.

That makes a lot more sense than my late night ramblings! Thank you