Does our big age gap mean I might not inherit my husband’s pension? STEVE WEBB replies

My husband and I have been together for almost 40 years, although there is a significant age difference between us.

He is now in his early 90s and I in my late 60s, and the spectre of ill health is always worrying us.

We have been trying to find out about his and my pensions.

I have recently received my state pension, but only get around £540 a month as my last 10 to 12 working years were spent looking after my husband who had cancer twice.

He has a full pension based on about 40 years of contributions which is worth approximately £940 a month, and a company pension of about £500 per month.

His company pension people say I may not be eligible for any of his pension as I am more than 15 years younger than him, and that it ‘depends’ on the situation after he dies.

Also, would I be entitled to anything from his state pension, as his widow?

It’s an awful situation to be in, as I was always the breadwinner for all our years together, and used property as my pension pot.

However, when he became ill that money had to be dipped into and nearly 20 years on there is not that much left. We also now rent.

I never thought I would ever be in this situation. Could you give any advice?

Steve Webb replies: I can well understand why financial planning is difficult if you do not know how much company pension or state pension you would receive if your husband were to die before you.

Although these are difficult things to think about, I would encourage any couple to find out how they would be placed financially following the death of one partner.

If we start with your husband’s company pension, most traditional ‘final salary’ type company pension schemes pay a pension to a surviving spouse.

This is typically paid at 50 per cent of the full pension, though some schemes have more generous arrangements than this.

When your husband contacted his scheme in 2022, it confirmed that a 50 per cent spouse’s pension would be payable, but then rather unhelpfully said: ‘Please note that this amount would be reduced if spouse is more than 15 years younger than you.’

Obviously this leaves you in limbo and you wondered if you would get anything at all.

It may seem a bit odd that schemes would care about the age difference between members of a couple.

The reason that this matters to them is that they have to set money aside to pay the expected liabilities of the scheme. This includes not just pensions to members but also pensions to any surviving spouse.

Where the spouse is much younger than the member, they can expect to be paying out a pension (albeit at the 50 per cent rate) for far longer.

To adjust for this extra cost, they may make a reduction, and in this case the scheme does so where the gap is more than 15 years.

When I contacted the scheme on your behalf, it said that the reason it had not given you a definite figure is that the exact reduction will depend on the actuary’s judgment at the time.

But, to be helpful, it has now issued an estimated figure which suggests that it will deduct just over a quarter from the pension you would otherwise receive, leaving you with just over a third of your husband’s current pension figure.

Turning now to your state pension, the difference in your ages means that your husband came under the ‘old’ state pension system (having reached pension age before April 2016) and you come under the ‘new’ system (having only recently reached pension age).

Where people fall either side of this line, there is a very helpful page on the gov.uk website which tells you how the rules work.

This can be found here: Your partner’s National Insurance record and your state pension.

In your case, you are on a relatively low ‘new’ state pension in your own right.

Unfortunately, you have told me that you did not claim Carer’s Allowance during your years as a carer.

This would have given you ‘credits’ towards your state pension for all these years, but sadly it is now too late to change that.

If your husband were to die before you, your state pension in your own right would not be affected, but you would be able to inherit part of any additional state pension (Serps/State Second Pension) which your husband built up.

But as he was in a company pension, which was probably ‘contracted out’ of Serps, his additional state pension might be quite modest.

The exact percentage which you can inherit depends on his date of birth, and you can find the different rates here: Inheriting additional state pension.

In your case, as your husband was born before October 1937, you will inherit 100 per cent of any additional state pension which your husband is currently receiving.

On top of this, if he built up any ‘graduated retirement benefit’ for work during the 1960s and early 1970s, you will inherit 50 per cent of this, regardless of his date of birth.

I hope that this is helpful in clarifying where you stand.