British state pension- spouse inheritance
Posted: Thu Sep 10, 2020 1:39 am
An interesting but ultimately very complicated response in The Daily Telegraph to whether the new state British state pension (it goes up in value but you can only claim it when you are older) on if surviving spouses can inherit half their deceased partner's state pension. My grandmother got half of my grandfather's state and two other occupation pensions when he died. However, it seems from this article that this may have disappeared with the new state pension. The Daily Telegraph is behind a paywall so I cut and pasted it. The journalist does give a caveat at the end of the article that it is best contact HMRC about your personal circumstances- but we all know how long that can take...
It reads:
Everyone with an NIC record as at 6 April 2016 is given a one-off starting amount, where the old state pension rules are compared to the new rules, with entitlement being based on the higher amount. If the starting amount is equal to or lower than the full new state pension, then there would be no inherited amount on death.
However, if the starting amount is above the full new state pension, the difference, known as a "protected payment", will be paid on top of a person’s new state pension when they reach their SPA. Half of any protected payment can also be inherited on death, with the inherited amount only becoming payable when the spouse or civil partner reaches their own SPA. This would also be on the provision that the recipient hadn’t married or formed a civil partnership before their SPA.
A person is only likely to have a protected payment through being employed for all or part of their working life and having earnings that would have built up an entitlement to an additional state pension.
As you have indicated that you were self-employed all your working life and therefore paid Class 2 NICs to build up entitlement to a state pension, it’s unlikely that you will have a protected payment. This means that your wife wouldn’t be able to inherit any of your state pension.
It reads:
Everyone with an NIC record as at 6 April 2016 is given a one-off starting amount, where the old state pension rules are compared to the new rules, with entitlement being based on the higher amount. If the starting amount is equal to or lower than the full new state pension, then there would be no inherited amount on death.
However, if the starting amount is above the full new state pension, the difference, known as a "protected payment", will be paid on top of a person’s new state pension when they reach their SPA. Half of any protected payment can also be inherited on death, with the inherited amount only becoming payable when the spouse or civil partner reaches their own SPA. This would also be on the provision that the recipient hadn’t married or formed a civil partnership before their SPA.
A person is only likely to have a protected payment through being employed for all or part of their working life and having earnings that would have built up an entitlement to an additional state pension.
As you have indicated that you were self-employed all your working life and therefore paid Class 2 NICs to build up entitlement to a state pension, it’s unlikely that you will have a protected payment. This means that your wife wouldn’t be able to inherit any of your state pension.