Marry your long term partner by April 2016 or you could lose out big time!
Not got round to proposing? Keep putting off those wedding bells? Do it soon or you could lose valuable pension income in the future…
Last week, my sister Judy got married to her long-term partner Clive.
It was a wonderful ceremony, and I was so happy that they tied the knot after fifteen years together. And because I can never quite switch off my ‘inner accountant’, at least a little of my happiness came from knowing my sister had potentially improved her future pension entitlement.
Clive turned 65 in August this year and became eligible to draw his state pension. In anticipation, Jude and Clive had asked me to look at their state pension position, so I helped them fill in and send off the downloaded forms at www.gov.uk/state-pension-statement. These short forms are both easy to download and straightforward to complete.
If you haven’t filled them in yet, it’s well worth doing now. The government seems to have got its act together on this one as both Judy’s and Clive’s forecasts arrived through the letterbox within 10 days.
Once we received the forecasts it was clear that Clive had built up a substantial Additional State Pension on top of the Basic amount. This is extra to the Basic State Pension and is based on Clive’s National Insurance contribution history. And if you are a married person, when your spouse dies you are often entitled to a percentage of that for the rest of your life.
Additionally, if your surviving spouse hasn’t paid enough contributions to earn the full Basic State Pension in their own right, it is possible in many cases for them to use your NI contribution to supplement it.
Now for the bad news…
On 6 April next year, changes to the law mean that anyone who marries after that date will no longer be able to benefit in these ways. From that date, the State Pension entitlement will be based solely on your own National Insurance record – any contributions made by a spouse or civil partner will be disregarded.
So, from Judy’s point of view, she was in a tricky place. If they had remained unmarried and Clive had died, Judy would not have been entitled to a penny of his State Pension. But by tying the knot before 5th April 2016 they have secured this valuable option for the remainder of their lives. Judy will be paid a large proportion of Clive’s Additional State Pension if he dies before her – no matter when that happens.
As state pensions are index linked, that could make a huge difference to Judy – in today’s money she could get an additional £180 per month.
Payments like these can make a big difference to your retirement and old age, so it’s definitely worth finding out whether getting married soon will give you a claim on your partner’s pension. In a nutshell, the answer is probably ‘yes’ if you marry someone before 6 April 2016 who has an Additional State Pension.
Once you have the pension forecasts in your hand, my advice would be for you and your partner to call the Future Pension Centre Helpline and ask them to explain the options relating to your own circumstances.
You can find their contact details here: – www.gov.uk/future-pension-centre
And in addition to the pension aspect…
…there’s also the Bereavement Allowance to consider. This is paid to some surviving spouses for the year after their husband or wife dies, as long as they die before their state retirement age. Depending on how old you are when your spouse dies, this could give you up to an extra £5,852 in your pocket if you fulfil the qualifying criteria. This amount will almost certainly be increased in future years, but remember – you can’t claim it if you haven’t got married.
Unlike pensions, the rules for this benefit aren’t currently scheduled to change on 6th April next year. You can find full details about it here: www.gov.uk/bereavement-allowance
I’m afraid we don’t act as marriage counsellors at THP… but if you want to know whether planning that long-overdue wedding will pocket your or your future spouse a better pension, be sure to get in touch. We’ll always do our best to help you.