New figures reveal more than half a million pensioners are inheriting over £5,000 a year from the State Earnings-Related Pension Scheme (Serps). The Serps let workers build up additional state pension income, but is no longer in operation.
If someone paid into the Serps, part of their pension can be inherited by a surviving spouse or civil partner, yet many people don’t realise they can claim.
Here, Which? explains who qualifies and how to find out if you can claim.
How the Serps worked
The Serps was introduced in 1978 to allow employees to build up an additional state pension income on top of their basic state pension.
It was later replaced by the State Second Pension (S2P) in 2002, before being scrapped in 2016 with the introduction of the new state pension system.
People who retired before April 2016 receive a combination of the basic state pension and an earnings-related additional state pension, which could come from the Serps or its successor, S2P.
Under the old state pension system, some of the additional pension built up through the Serps can be inherited by a surviving spouse or civil partner.
The amount passed on depends on how much the deceased had accrued, their date of birth, and when they died.
Find out more:How much could you inherit?
Surviving spouses and civil partners can potentially inherit at least 50% of certain state pension benefits, up to a maximum of £11,356 (£218 per week) for the 2024/25 tax year.
This is in addition to any state pension they are entitled to themselves. As a result, some pensioners could receive a total state pension of £22,858 a year.
New figures obtained by Royal London via a Freedom of Information request reveal that more than two million pensioners received an inherited Serps payment in 2024.
Of these, over half a million (541,760) inherited more than £5,000 a year, while 17,460 received over £10,000.
The average inherited Serps payment for 2023/24 stood at £3,377.
The table below shows the number of recipients that receive inherited money from the Serps in 2024.
undefinedWho can inherit Serps income?
If your spouse or civil partner dies, you may be able to inherit part of their Serps pension, but the amount depends on when they were born and when they died.
However, you cannot inherit the money if your late spouse or civil partner remarried or entered a new civil partnership before reaching state pension age.
Are you missing out?
Royal London is urging people to check if they are eligible, as many may not realise they can claim.
Sarah Pennells of Royal London says: ‘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.’
Find out more:Boosing your pension with voluntary NI contributions
If your National Insurance (NI) record is incomplete, you may be able to boost your state pension by making voluntary Class 3 contributions.
Normally, you can only pay for gaps from the past six tax years, with a deadline of 5 April each year. However, a temporary rule introduced in 2014 allows some people to buy back missing years as far back as 2006-07.
Voluntary contributions won’t always increase your pension, so it’s important to check whether it's worth topping up first.
Find out more:source https://www.which.co.uk/news/article/the-inheritance-rule-that-could-boost-your-pension-aEliu9f4BKGg