ADDITIONAL STATE PENSION TRANSFER TO WIDOW

Puddinglady

How can it be right that there is a cap on the amount of additional pension that can be transferred to a widow. I am being penalised for my late husband and I having both paid SERPS. Had only one of us paid then,  on the death of the other, the full amount would have been transferred. This seems like robbery to me. It is looking more and more as if looking after your retirement does not pay.

Marcon

Puddinglady said:

How can it be right that there is a cap on the amount of additional pension that can be transferred to a widow. I am being penalised for my late husband and I having both paid SERPS. Had only one of us paid then,  on the death of the other, the full amount would have been transferred. This seems like robbery to me. It is looking more and more as if looking after your retirement does not pay.

What were your husband's date of birth and date of death? What is your date of birth?

Puddinglady

Husband 01/1936 - 12/2019
Self 05/1944

xylophone

You started receiving your state pension (Basic and Additional) in 2004 while your husband started receiving his (basic and additional) in 2001.

He died in 2019 and you were entitled to up to 100% of his Additional State pension because of his date of birth/date of reaching SPA.

However, you had additional state pension of your own and were therefore subject to the state pension cap. 

See below which sets out rules pre and post New State Pension.

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

Currently,  where a surviving spouse or civil partner has additional State Pension of their own, the combination of their own plus inheritable additional State Pension is subject to a cap. This rule has been in place since 1979, when the first payments of additional State Pension were possible. In 2012/13, the maximum additional State Pension cap was around £162.

36.The cap is based on the maximum possible amount of additional State Pension a hypothetical high-earner could accrue, on the assumption that they reached SPa in the year entitlement to the combined additional State Pension arises. Graduated Retirement Benefit is excluded from the cap. 

And
https://www.gov.uk/additional-state-pension/inheriting

If you get your own Additional State Pension

The maximum amount of Additional State Pension you can get is £179.41 per week. The limit does not include State Pension top up.

Puddinglady

I am aware of everything in your response, but question the fairness of the rules. Had one of us put our money into VAC'S to our private pension,  then the whole amount would have gone to the surviving spouse.

xylophone

question the fairness of the rules.

But why? He paid for his pension and you for yours - being able to claim up to 100% of spouse ASP is a concession.

Marcon

Puddinglady said:

Husband 01/1936 - 12/2019
Self 05/1944

If you both belonged to company pension schemes (and your reference to paying Additional Voluntary Contributions suggests you did), given your respective ages it is highly likely you weren't both paying in to SERPS, or at least only doing so for part of your working lives.

Any of the following terminology ring any bells/appear anywhere on the paperwork relating to your or your late husband's pension schemes: 

• final salary
• defined benefit
• contracted out
• Guaranteed Minimum Pension (GMP)

Are you receiving a widow's pension from your husband's scheme?

Puddinglady

You both seem to be missing the point. Yes we both have private pensions and these were paid for on the terms that both were transferable to the surviving spouse. No problem, that was done. WE also paid SERPS. This is not a benefit, we paid for it, on the understanding that the additional pension would also be transferable. Because we both worked and looked after our futures we have been penalised to the tune of £50 a week. That is the issue.

molerat

Where did you get the impression that additional pension was fully transferable ?  AFAIAA it never has been fully transferable and has always been limited to topping up to the additional pension cap.  You have not lost anything.

Marcon

Puddinglady said:

You both seem to be missing the point. Yes we both have private pensions and these were paid for on the terms that both were transferable to the surviving spouse. No problem, that was done. WE also paid SERPS. This is not a benefit, we paid for it, on the understanding that the additional pension would also be transferable. Because we both worked and looked after our futures we have been penalised to the tune of £50 a week. That is the issue.

Neither private pension is 'transferable' to the surviving spouse; they pay benefits to survivors, but not the whole lot. Why would SERPS be any different? Your husband had the benefit of his State Additional Pension for many years before he died.

You're also missing the point that if you had chosen to contract out of SERPS (which you could only have done at a time when you weren't already in contracted out employment), any SERPS benefits which were available for transfer would have been lower, so you're on a bit of a circular argument here.

xylophone

This is not a benefit, we paid for it, on the understanding that the additional pension would also be transferable. 

Did you check the actual position? See my link above.