More than two million pensioners are boosting their state pension through inheritance, with over half a million receiving more than £5,000 annually, according to figures obtained by Royal London.
A freedom of information request by Royal London has revealed that in the 2023/24 tax year, over two million pensioners received a payment from an inherited State Earnings Related Pension Scheme (SERPS).
The scheme was part of the state pension system before 2016 and enabled employees to build up an entitlement to extra state pension income. It was abolished under the new state pension system in April 2016.
As part of the scheme, surviving spouses and civil partners can potentially inherit at least 50% of certain state pension benefits up to a maximum of £11,356 for the 2024/25 tax year, in addition to their own state pension. As a result, some pensioners are currently receiving an enhanced state pension of up to £22,858 a year.
The amount someone can inherit is calculated according to the data a husband, wife or civil partner died and their age at the time of death.
Royal London said the freedom of information data showed that in 2023/24, 2,027,440 people received a payment from SERPS, including 541,760 pensioners who received more than £5,000 a year and 17,460 who received in excess of £10,000.
The average inherited SERPS payment for 2023/24 was £3,377 annually.
Sarah Pennells, consumer finance specialist at Royal London, 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.
“As we continue to adapt to the new system introduced in 2016, which focusses on individual entitlements, understanding the legacy of SERPS and its relevance for thousands of retirees remains crucial.”
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