Pensioners across the UK are being urged to make an important check which could boost their State Pension payments by more than £5,000 per year.
New figures obtained by pension provider Royal London have revealed that more than half a million pensioners are increasing their pension pot by over £5,000 annually through an inheritance loophole. The firm says that surviving spouses and civil partners can potentially inherit at least 50% of certain State Pension benefits up to a current maximum of £11,356. This amounts to £218.39 per week and is on top of any State Pension they are already entitled to.
The inheritance payments come from the State Earnings Related Pension Scheme (SERPS) which was part of the State Pension system before 2016. The scheme – no longer in operation – allowed employees to build up an entitlement to extra State Pension Income.
If someone paid into SERPS then part of their pension can then be inherited by their surviving spouse or civil partner, but many people may not realise they are entitled to claim it.
According to Royal London, some pensioners are getting an enhanced State Pension of up to £22,858 per year through this inheritance rule.
Figures from the firm found that in the tax year 2023/24, more than 500,000 pensioners were getting over £5,000 per year in inherited SERPS payments, while more than 17,000 received in excess of £10,000.
If your spouse or civil partner dies then you may be entitled to inherit part of their SERPS pension, but the amount you can inherit is dependent on when they died and their age at the time of their death.
According to the 2024 figures obtained by Royal London, the average inherited SERPS payment for 2023/24 stood at £3,377 annually.
Royal London’s consumer finance specialist Sarah Pennells said: “This data shows how much of a difference inheriting a SERPS pension from your husband, wife or civil partner can make. The worry is that, while more than two million people are claiming inherited SERPS, others could be missing out.
“Understanding the rules is key to boosting your retirement income. For the Additional State Pension, generally 50% can be inherited by your husband or wife, although the rules are slightly different for people who reach State Pension age after April 2016. However, a higher percentage can be passed on if the man was born before October 6, 1945, and the woman was born before July 6, 1950.
“However, the rules also say that you can’t inherit any additional State Pension from your husband if they remarried or formed a civil partnership before they reached State Pension age.
“As we continue to adapt to the new system introduced in 2016, which focuses on individual entitlements, understanding the legacy of SERPS and its relevance for thousands of retirees remains crucial. If you’re in doubt about your inherited SERPS entitlements, then you should contact the Pension Service to find out what you should be receiving.”
