In receipt of additional state pension which was reduced by the amout of inherited GMP she recived w

xylophone

I'm afraid that I cannot pick up the image.

With regard to the  pre 97 AP from which the COD is deducted, as I understand it this figure is always calculated as the amount which a person would have received had he not been contracted out.

The COD is the actual amount of the GMP revalued to GMP age.

Where a person had contracted out into a pension pre 97 and then left the scheme (so that the pension became deferred), if the GMP element of his deferred pension revalued at Fixed (rather than Full) Rate (common in private schemes), then his COD would often be far higher than the AP so that he received no index linking through the SP for many years (if ever).

Billopp

Tell me if you can open the following which comes from a letter sent to my wife in December last year.

Eligibility for Inheritance:

As your spouse was born between 06/10/1939 and 05/10/1941, you would be eligible to inherit:

• 80% of their Pre '97 Additional Pension
• Less 50% of their Contracted Out Deduction (always rated at 50% inheritable)
• 50% of their Graduated Retirement Benefit (always rated at 50% inheritable)

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Converted State Pension Using 2023/24 Component Rates:

Basic State Pension Payable Total: £156.20

• Your own Basic State Pension at 94% of the current Maximum Rate: £146.83
• Inherited Basic State Pension to attain the current Maximum Rate: £9.37

Additional Pension Payable Total: £152.96

• Your own Pre '97 Additional Pension: £29.34
• 80% inherited Pre '97 AP (£154.53 x 80%): £123.62

Sub Total: £192.41

• Your own Post '97 Additional Pension: £33.72
• Your own Post '02 Additional Pension: £5.73

Less 50% inherited Contracted Out Deduction: (£104.29 x 50%) = £52.15

Payable Balance: £140.26

• Your own Graduated Retirement Benefit: £0.33
• 50% inherited Graduated Retirement Benefit (£7.06 x 50%): £3.53
• Age Addition component: £0.25

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Revised Weekly State Pension: £300.57

This calculation is based on the current legislation at the date of widowhood.

Regarding my own AP it was not revalued at fixed rate. I am in receipt of £50.24 additional state pension. If I had never been contracted out I would have received £154.53. I stand to inherit  £59.63 AP from my wife which when added to my own AP makes a total£109.87 which is much less than the maximum allowed of £204.68.

All I want to know is why do you think the DWP use the AP I would have received rather than the actual AP ireceive to work out the maximum I can receive as any normal person would just expect the DWP to add AP I am receiving to inherited AP.

I do realise the DWP use the AP I would have received but I want to know the reason why as it does not make sense.


With regard to the  pre 97 AP from which the COD is deducted, as I understand it this figure is always calculated as the amount which a person would have received had he not been contracted out.

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Yes I can see the above.

As far as I can see, it ties up with the information in the Annex here (from page 20)

https://assets.publishing.service.gov.uk/media/5a758e27e5274a6faebebd94/derived-inherited-entitlement.pdf

And with regard to calculation of ASP/COD, does this help?

https://www.lcp.com/media/1150050/why-is-money-being-deducted-from-my-state-pension.pdf

1. As we will explain in more detail later, at retirement an individual’s additional state pension for the period 1978/79-1996/97 would be the SERPS pension they would have built up if they had not been contracted out minus the GMP for that period.

Billopp

Some questions .

1) Do you believe the DWP are correct in Deducting inherited GMP from survivors own AP.

2) Do you think the DWP are correct in using the additional pension I would receive if I had never been contracted out and adding it to inherited AP to work out what AP I can receive or do you think they should use the actual AP they pay me and addit to the inherited AP.

As far as I can see, it ties up with the information in the Annex here (from page 20)

https://assets.publishing.service.gov.uk/media/5a758e27e5274a6faebebd94/derived-inherited-entitlement.pdf

Page 20 shows the following

  61. We estimate that approximately 8,000 women will be expected to benefit from these transitional arrangements for women who have paid the RRE. Inheritance: 62. Women who paid the RRE will be entitled to an inherited amount as per Scenarios 1 -3.  

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Page 20 shows the following

Sorry, I should have said p20 onwards or better p21 onwards where you will find the ANNEX

ANNEX A: Overview of the current system of derived entitlement to State Pension:

I don't see how my opinion (or indeed anybody's opinion) of the calculation is anything to the purpose.

DWP uses a set formula.

They look at the deceased's COD and apply half of it to the survivor's COD (if there is one) and deduct it from the survivor's  adjusted pre 97 ASP as in the post here

https://forums.moneysavingexpert.com/discussion/comment/79027229/#Comment_79027229

If the deceased had not been contracted out between 1978 and 1997, then he would not have a COD.

Billopp

Thanks for coming back to me.

The only reason I asked for your opinion is that the DWP has been making thousands of mistakes in the way they calculate women's pensions at state pension age or on the death of their husband. Some of them have had payments of over £100,000.

It is only because Steve Webb has got involved that they are sorting out the problems.

In my wifes case they have used my wifes own additional state pension and additional state pension I would have received if I had never been contracted out to work out what is payable so she would get an increase in AP on my death.

In the cases mentioned in the threads and newspaper articles where women have seen a reduction in their own AP when their husband dies because they are not using spouses gross AP. Just does not seem correct to have a husbands occupational inherited GMP which is fully funded by the occupational pension deducted from her own AP paid for by her own NI. 

A GMP is just part of a persons normal pension entitlement and not something extra.