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  • FIRST POST
    • jennifurroberts
    • By jennifurroberts 14th Apr 18, 4:31 PM
    • 9Posts
    • 2Thanks
    jennifurroberts
    Missold State Pension Top up?
    • #1
    • 14th Apr 18, 4:31 PM
    Missold State Pension Top up? 14th Apr 18 at 4:31 PM
    Hi All,

    I purchased a pension top up for my spouse. We spent ~18K getting him 25 extra a week on his state pension. I am 25 years yournger than he and was told I would receive 90% of the extra 25 purchased (on top of whatever part of the state pension I was entitled to) if he should predecease me. It looked like a great deal. (The ~18K would be save from the ravages of inflation, etc)...

    I had assumed it would be at the point of widowhood. However, I have just discovered it would be when I qualified for my own pension. So there would be a hiatus between becoming a widow and receiving the inherited state pension.

    This makes the purchase nowhere near the great deal we thought it was. If my spouse should die early or I should die before becoming a pensioner then it is a bad deal indeed.

    We feel had we known I would only inherit at the point of becoming a pensioner and not the point of widowhood we would not have bothered with the purchase.

    It was HMRC who actually sold the pension top up (via Class 3A Voluntary National Insuarance Contributions - NB: not Class 3 Voluntary National Insuarance Contributions).

    HMRC did not make it clear to me nor did I ask when as the survivinng spouse I would get to inherit the additional state penison top ups. Should HMRC have told me? Should we have known/asked?

    All in all, we would like to undo this purchase.

    Do we have any remedy?

    Any and all help appreciated.

    Best wishes,

    Jennifur
    Last edited by jennifurroberts; 14-04-2018 at 4:34 PM.
Page 1
    • Silvertabby
    • By Silvertabby 14th Apr 18, 5:16 PM
    • 3,248 Posts
    • 4,682 Thanks
    Silvertabby
    • #2
    • 14th Apr 18, 5:16 PM
    • #2
    • 14th Apr 18, 5:16 PM
    To be fair, it probably didn't occur to HMRC to point out that you would only get this State pension top-up at State pension age. Granny, eggs and sucking springs to mind.

    What private/occupational pensions does your husband have? Do they include widow's benefits? What about your own private/occupational pensions?
    • JezR
    • By JezR 14th Apr 18, 5:20 PM
    • 1,548 Posts
    • 1,100 Thanks
    JezR
    • #3
    • 14th Apr 18, 5:20 PM
    • #3
    • 14th Apr 18, 5:20 PM
    This Goverment explanatory document gave the following on inheritance:

    Inheritance
    Your State Pension top up may be inherited by your surviving spouse or civil partner in line with the arrangements for inheritance of additional State Pension under SERPS (additional State Pension built up before April 2002). This means that, in most cases, between 50% and 100% may be inherited, depending on your date of birth. The inherited top up will be payable immediately if your spouse or civil partner is already receiving their State Pension when they are widowed. If they are under State Pension age when you die and they are entitled to Widowed Parent's Allowance it will be paid as part of that benefit, or otherwise it will be payable when they get their State Pension.
    • mgdavid
    • By mgdavid 14th Apr 18, 5:24 PM
    • 5,666 Posts
    • 4,996 Thanks
    mgdavid
    • #4
    • 14th Apr 18, 5:24 PM
    • #4
    • 14th Apr 18, 5:24 PM
    HMRC are not an IFA, they didn't 'sell' you anything. They will have provided information in response to your questions perhaps, but the responsibility to check on all the surrounding issues which might pertain to your individual circumstances is yours alone. All the information you need is in the public domain - it just needs looking up.
    https://www.nidirect.gov.uk/articles/inheriting-basic-state-pension

    https://www.gov.uk/new-state-pension/inheriting-or-increasing-state-pension-from-a-spouse-or-civil-partner

    etc
    The questions that get the best answers are the questions that give most detail....
    • kidmugsy
    • By kidmugsy 14th Apr 18, 6:14 PM
    • 11,589 Posts
    • 8,112 Thanks
    kidmugsy
    • #5
    • 14th Apr 18, 6:14 PM
    • #5
    • 14th Apr 18, 6:14 PM
    Buy some insurance against your husband dying before your state pension begins. And stop trying to stick the taxpayer with the bill for your blunder.
    Free the dunston one next time too.
    • Brynsam
    • By Brynsam 14th Apr 18, 6:20 PM
    • 1,578 Posts
    • 1,144 Thanks
    Brynsam
    • #6
    • 14th Apr 18, 6:20 PM
    • #6
    • 14th Apr 18, 6:20 PM

    I had assumed....
    Originally posted by jennifurroberts
    That's the problem: you assumed, rather than establishing the facts. Up to you to do so - it's not for HMRC to ensure you understand what you're doing.
    • ermine
    • By ermine 14th Apr 18, 7:02 PM
    • 675 Posts
    • 1,038 Thanks
    ermine
    • #7
    • 14th Apr 18, 7:02 PM
    • #7
    • 14th Apr 18, 7:02 PM
    Do we have any remedy?
    Originally posted by jennifurroberts
    Have you asked HMRC if they will refund the purchase given it doesn't meet your needs?

    Alternatively, what you want is term life insurance on your partner to run between now and when you reach SP age, though it will cost more. Term life insurance is taken out between a fixed start date and a fixed end date, though you can usually stop paying the premiums before the end date, in which case the insured risk stops being insured.

    This seems a classic case of not asking the right questions before you buy. It's not mis-selling, since you weren't advised.
    • Dox
    • By Dox 14th Apr 18, 9:29 PM
    • 937 Posts
    • 719 Thanks
    Dox
    • #8
    • 14th Apr 18, 9:29 PM
    • #8
    • 14th Apr 18, 9:29 PM
    Have you asked HMRC if they will refund the purchase given it doesn't meet your needs?
    Originally posted by ermine
    I presume this comment is made in jest?
    • p00hsticks
    • By p00hsticks 14th Apr 18, 9:57 PM
    • 6,381 Posts
    • 6,917 Thanks
    p00hsticks
    • #9
    • 14th Apr 18, 9:57 PM
    • #9
    • 14th Apr 18, 9:57 PM
    I presume this comment is made in jest?
    Originally posted by Dox
    Not quite the same situation, but I seem to recall more than one poster on this board who has recently bought additional NI (class 3) years in the mistaken belief that they would increase their state pensions, and have subsequently managed to get the purchase reversed by HMRC when they realised it would not.
    Last edited by p00hsticks; 14-04-2018 at 10:01 PM.
    • Asghar
    • By Asghar 14th Apr 18, 10:28 PM
    • 208 Posts
    • 123 Thanks
    Asghar
    Not quite the same situation, but I seem to recall more than one poster on this board who has recently bought additional NI (class 3) years in the mistaken belief that they would increase their state pensions, and have subsequently managed to get the purchase reversed by HMRC when they realised it would not.
    Originally posted by p00hsticks
    Yes, but in this case the State Pension has increased.
    It's just the future widows entitlement to it that the poster mistook and was NOT mis-sold.

    I presume that the spouse has already reached State Pension age, it would explain the 18K paid for an extra 25 per week.
    • xylophone
    • By xylophone 14th Apr 18, 11:38 PM
    • 26,488 Posts
    • 15,730 Thanks
    xylophone
    http://paullewismoney.blogspot.co.uk/2015/10/boost-your-pension.html
    • jennifurroberts
    • By jennifurroberts 16th Apr 18, 9:08 PM
    • 9 Posts
    • 2 Thanks
    jennifurroberts
    How much have I cost myself?
    Hi All,

    HMRC knew my husband qualified for the top ups and I had told them I was 25 years younger than he. When I asked if I would receive them on his death and they said yes I would but could HMRC not have said 'but only on reaching pensionable age yourself? I made several phone calls to several persons saying the above but no-one said anything about having to reach pensionable age first.

    Could someone tell me how big a blunder this is? I calculate 10 life years for spouse and 5 live years for me (post-pensionable age) and we get our money back and it does save the ~18K from the ravages of inflation. However, missed opportunity costs (such as putting it in stocks and shares etc) must be something. How much have I cost myself?

    Best wishes,

    Jennifur
    Last edited by jennifurroberts; 16-04-2018 at 9:20 PM. Reason: Fuller post needed
    • Brynsam
    • By Brynsam 16th Apr 18, 11:02 PM
    • 1,578 Posts
    • 1,144 Thanks
    Brynsam
    Hi All,

    HMRC knew my husband qualified for the top ups and I had told them I was 25 years younger than he. When I asked if I would receive them on his death and they said yes I would but could HMRC not have said 'but only on reaching pensionable age yourself? I made several phone calls to several persons saying the above but no-one said anything about having to reach pensionable age first.

    Could someone tell me how big a blunder this is? I calculate 10 life years for spouse and 5 live years for me (post-pensionable age) and we get our money back and it does save the ~18K from the ravages of inflation. However, missed opportunity costs (such as putting it in stocks and shares etc) must be something. How much have I cost myself?

    Best wishes,

    Jennifur
    Originally posted by jennifurroberts
    The unhappy reality is that it depends what you asked. HMRC would simply argue that the relevant information was readily available in the public domain and it isn't their role to give any sort of advice. The other possibility is that someone did say it, but if it was a throwaway snippet such as 'at SPA', it might not have registered with you if you were focused on other parts of their answer.

    Impossible to know what else you might have invested in and what the outcome could have been, so there really is no way to calculate how much your action (which isn't necessarily a blunder) 'cost'.
    • mgdavid
    • By mgdavid 17th Apr 18, 1:04 AM
    • 5,666 Posts
    • 4,996 Thanks
    mgdavid
    No point in worrying, what's done is done and cannot be undone or changed. Best to be looking forwards....
    The questions that get the best answers are the questions that give most detail....
    • Malthusian
    • By Malthusian 17th Apr 18, 9:50 AM
    • 4,651 Posts
    • 7,432 Thanks
    Malthusian
    How much have I cost myself?
    Originally posted by jennifurroberts
    As it stands, nothing, as neither of you have died prematurely. And if you don't both die prematurely, a return of 7.2% per annum guaranteed for life with inflation linking (even with the capital lost on death) is an outstanding deal, one that you can't get anywhere else. The 6.5% you would inherit from him is still an outstanding deal.

    If he dies now and you end up with a 6.5% inflation-linked annuity deferred for 25-odd years (you haven't stated your actual ages), that's not as good, but still isn't a bad deal based on the level of growth you would need to buy the same income on the open market in 25 years' time.

    If both of you die prematurely (which is the only way you can actually lose the 18k), I would suggest coming back then and asking us to help calculate your loss.
    • JezR
    • By JezR 17th Apr 18, 11:01 AM
    • 1,548 Posts
    • 1,100 Thanks
    JezR
    The calculations of the amount payable was actuarially neutral, and cost significantly less than available for a comparable product in the open market at the time. In your circumstances on average you would be on the 'benefit' side of the averaging, assuming you meet the expected lifetimes. IIRC it was only a poor deal for those with known ailments that would have impaired life expectancy, especially if single, where using the capital or possibly an enhanced annuity would have been better. What would also come into the equation for you would have been making payments into a pension for yourself.
    • greenglide
    • By greenglide 17th Apr 18, 3:41 PM
    • 3,164 Posts
    • 2,059 Thanks
    greenglide
    The calculations of the amount payable was actuarially neutral, and cost significantly less than available for a comparable product in the open market at the time.
    The best "product" available to people with an SPa before 6th April 2016 was generally deferral of the state pension in preference to the Class 3a top up.

    HMRC would not have told claimants of this either though.

    This, however, also does have the case whereby if the pensioner dies before the younger spouse reaches SPa there is a gap in the pension. It may be more obvious in these circumstances though.
    • JezR
    • By JezR 17th Apr 18, 4:22 PM
    • 1,548 Posts
    • 1,100 Thanks
    JezR
    There certainly was a hierarchy of various options to look at on the SP/NI side too, depending on specific circumstances. That is what an IFA ought to have been able to advise on.
    • jennifurroberts
    • By jennifurroberts 1st May 18, 4:56 PM
    • 9 Posts
    • 2 Thanks
    jennifurroberts
    Lol
    "I have enquired from yourselves as to whether I was mis-sold PPI and you have replied via email and I quote "you haven't raised a mis-sale complaint yet" so I am now doing so."

    Malthusian,

    I lol at this line of yours and read it to my spouse. Thank you.

    I have thanked nearly everyone who has posted. I post (for other things) on other forums but for sheer helpfulness this has really surprised me.

    All this is new to me (financial planning) and hence my ignorance of various subtleties.

    I would also like to thank the poster who asked me to purchase insurance against the early death of my husband.

    If anyone of you posted anything of significance and I have not singled it out for comment or praise please do not be offended but pity my lack of judgement.

    Again, many thanks everyone.

    Best wishes,

    Jennifur
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