Beware State Pension shock when partner dies

OneInTheHat wrote: »

and that's about all you get. I am also single and planning for a retirement on my own and it's a fairly daunting task. Other than council tax, my household bills are the same. Food is the only other one that comes down on your own.

Definitely agree that it's much tougher for someone single to save/plan for a decent retirement.

My comments aren't directed at the minority: the highly paid, women with no children (gender will be a big legacy pension disadvantage for some years yet), those with generous DB benefits, etc. This is not the norm for most.

I have been running homes as a single, and as one of a couple, in the last decade. Mortgage paid off in both scenarios. Same house. The bills increased only marginally when OH moved in but the household income increased dramatically, and so did the pension provision. There has been a significant increase in food costs (around 30%), a little extra on the water bill, and the council tax discount disappeared. Marginal cost of extra person pretty small on total non-discretionary spends.

The increase in discretionary spending (entertainment, eating out, holidays, gifts) has been much higher (more than doubled - says a lot about OH's spending habits).

I don't think you can compare someone who enters retirement single to those who do so as a couple, and then become single (widowed/divorced). The former will have planned their finances based only on their own resources, the latter will almost certainly have viewed all pensions/assets as one pot regardless of the name on the tag. Singles are likely to have less household income from the get-go whilst couples need to plan for (possibly) a big reduction in income on the first death.

The pension rules have only recently changed. The legacy of many preceding decades will take a few more decades before the financial/cultural transition is complete. Most people have known for eons about things like equalisation of pension age. A great many still don't know the small print of changes now implemented that weren't even proposed a decade ago, and many are still making assumptions based on old rules. I was told (for example) in 2006 (by DWP) not to bother making up missing NI years as I could claim against my ex's NI record. That's no longer the case and, luckily for me, I checked the small print of the new rules very carefully.

The bottom line is that singles/widows are the poorest retired demographic (check-out the latest Age UK report). The poorest of all are single/widowed women. This is the legacy of cultural norms and pension rules that prevailed for much of the 20th century.

There is still a widespread lack of knowledge about the new state pension and new pension rules. I know plenty who have yet to check their SP forecast despite being within two years of retirement. Plenty more don't know that the state widow/er's pension is now binned. The mainstream media has marginalised the important detail. Possibly it's too complicated to explain in their usual soundbites and headlines.

I see lots of threads discussing retirement finances. Most seem to be in couples and they base their 'number' on lifelong availability of both parties' total guaranteed pension income. It's hardly mentioned that the new SP will either disappear or significantly reduce on death, or that any DB pension will reduce by 50%.

Often one of a couple has a much bigger pension than the other but most people don't have massive individual pension pots. The average income for a retired couple is now in the region of £25k. For home-owner couples with no mortgage that sounds pretty reasonable. But what it it consists of two SPs, plus one person's £7000 DB and a £2k drawdown (other person's name)?

First death (if higher pension earner): household income reduces to approx. £13.5k.
First death (if lower pension earner)): household income reduces to approx. £17k (assuming survivor inherits balance of DC/SIPP and drawdown at the same rate is sustainable).

That looks like a pretty drastic drop in household income to me, especially for the lower income pensioner.

A single will generally enter retirement with different (lower?) expectations and won't suffer any income shocks like this. However, a single also won't enjoy the benefit of the higher living standard supplied by two pension incomes before the first of a couple dies.

Couples need to prepare for a drop in household income on the first death regardless of how big their pension pots, and the media should spend a bit more time highlighting the issues for retired singles whether or not they entered retirement with that status.

NB: Married, no kids, nearing retirement, reasonable pension provision, full NI record, mortgage paid, no debts, OH with generous pension. I'm in the minority so could others like me please refrain from the 'doesn't apply to me so doesn't apply to the majority' mantra before checking the facts. Inconvenient truths are no less truths. Singles do have higher costs per head. Singles do have less pension income per head. People do experience an immediate drop in income when widowed in retirement. Women do earn substantially less than men over their lifetimes, and have substantially less pension provision as a result. Lower earners and part-timers were denied access to the same pensions as high earners and full-time workers. Private sector workers are now denied the same access to pension benefits as public sector. Equalising pension laws and rules will not change the legacy of decades for many, many years and anyone blaming the victims of past/present discrimination for the consequences of that discrimination says much about the selfishness, intolerance and ignorance of some individuals.

End of over-long post and over-long rant (apologies to the forum and, especially, to the OP for hijacking the thread).

One thing missed is that men tend to follow their wives into the grave while widows carry on as before.
In addition, forty years ago some women chose to pay a smaller stamp.

DairyQueen wrote: »

Definitely agree that it's much tougher for someone single to save/plan for a decent retirement.

I don't think you can compare someone who enters retirement single to those who do so as a couple, and then become single (widowed/divorced). The former will have planned their finances based only on their own resources, the latter will almost certainly have viewed all pensions/assets as one pot regardless of the name on the tag. Singles are likely to have less household income from the get-go whilst couples need to plan for (possibly) a big reduction in income on the first death.


I see lots of threads discussing retirement finances. Most seem to be in couples and they base their 'number' on lifelong availability of both parties' total guaranteed pension income. It's hardly mentioned that the new SP will either disappear or significantly reduce on death, or that any DB pension will reduce by 50%.

Often one of a couple has a much bigger pension than the other but most people don't have massive individual pension pots. The average income for a retired couple is now in the region of £25k. For home-owner couples with no mortgage that sounds pretty reasonable. But what it it consists of two SPs, plus one person's £7000 DB and a £2k drawdown (other person's name)?

First death (if higher pension earner): household income reduces to approx. £13.5k.
First death (if lower pension earner)): household income reduces to approx. £17k (assuming survivor inherits balance of DC/SIPP and drawdown at the same rate is sustainable).

That looks like a pretty drastic drop in household income to me, especially for the lower income pensioner.


End of over-long post and over-long rant (apologies to the forum and, especially, to the OP for hijacking the thread).

Great post DQ, very thought provoking. I have only really concentrated on pensions properly in the past year or so and one of the key factors we need to look at carefully is the poorer pension provision of Mrs CRV compared to mine.


Mrs CRV will get about a 16k pa loss of income should I go first, compared with my losing 8k if she should go first. Our plans include my building a DC pot (using SS), build as much as possible her pension provision (also DC) and using our ISAs. With the idea that these will pass to the other on first death and anything left over to heirs (a big if as one son tells me to start SKI-ing- spend the kids inheritance!). I think that maybe one more pension reform is needed- allow transfer of part of the pension saving allowance (the current 40 k pa) to be transferred to the lower earner by the higher earner, just like you can transfer current tax allowance (only a little I agree) from lower/ non earner to higher earner.


I agree much of the problem has been due to poor pension education, even amongst those with reasonable general education, let alone those who rely on tabloids for advice. I thought I was quite savvy until I spent time reading up including this forum. It all goes over Mrs CRV head and she just wants to know like many people what is the bottom line.

cloud_dog wrote: »

Excellent post DQ.

So many of the points you raise are why I am reviewing my/our own pension position in light of the overall situation (with / without me).

Ditto We have decided to manage this by keeping non-discretionary expenses within a range supportable on the lowest possible pension income available to each of us. We would rather do that than 'upscale' our lifestyle and then face downsizing/struggling when the first of us dies.

ams25 wrote: »

Personal finance needs to be taught in schools to fix this.

Absolutely agree. Reading, writing, driving - all essential skills. Knowing the basics about pensions and investing has never been more important. The government has unleashed a genie that can be helpful or harmful. All depends on each individual's ability to manage it but how can they do so without the necessary information and skills? (rhetorical)