The Department for Work and Pensions (DWP) is increasing state pension payments to up to £22,858 for some pensioners through a pre-2016 inheritance rule. Over 500,000 individuals are benefiting from this scheme, which allows surviving spouses and civil partners to inherit at least 50% of certain state pension benefits.
Inherited SERPS Payments
Data from the DWP reveals that more than two million pensioners (approximately 2,027,440) received a payment from an inherited state earnings-related pension scheme (SERPS) last year. Of these, 541,760 pensioners received over £5,000 annually, and 17,460 received more than £10,000. The average inherited SERPS payment for the 2023/24 tax year was £3,377.
How the Scheme Works
The SERPS scheme was part of the state pension system before April 2016, enabling employees to build up extra state pension income. Under the current rules, surviving spouses or civil partners can inherit at least 50% of certain benefits, up to a maximum of £11,356 for the 2024/25 tax year. This can result in an enhanced state pension of up to £22,858 annually. The amount inherited depends on the deceased partner's data and age at death.
Royal London, which obtained the data via a freedom of information request, highlighted the impact of these payments. Consumer finance specialist Sarah Pennells stated: "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."
She added: "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."
