State pension rules could lead to unexpected financial misery, analysis reveals.
A little noticed change, which came into effect in 2016, means a typical pensioner’s household income could plummet by up to 66% following the death of a spouse.
This could leave many struggling to make ends meet because bills might only drop by a small amount.
Former Pensions minister Sir Steve Webb said: “As well as the emotional impact of bereavement, losing a spouse in later life can have a huge impact on living standards.
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“Under the new state pension system, widows and widowers will inherit little, if anything, of their late spouse’s pension, and income from an annuity often ceases when the recipient dies.”
Sir Steve, director of policy at insurer Royal London, which did the analysis, added: “Household outgoings may reduce somewhat but income is likely to fall by much more.”
Before 2016, when a married person died, their spouse was entitled to make a claim to boost their state pension income based on the deceased partner’s National Insurance record.
This has now been abolished as the amount of state pension we each receive is based on individual NI records only.
An added problem is that some older women have no private/workplace pension savings.
