Do Widows and widowers have money deducted from their state pension if their spouse or civil partner who has been contracted dies before them

Department for Work and Pensions did not have the information requested.

Dear Department for Work and Pensions,

Can you please let me have any information you have that mentions widows and widowers will have money deducted from their state pension because their spouse or civil partner had been contracted out and also tell me if all widows and widowers have money deducted from their state pension because their spouse or civil partner had been contracted out.

Yours faithfully,

C. Thompson

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Dear C Thompson,

I am writing in response to your request for information, received 17th
November.

Yours sincerely,

DWP Central FoI Team

Dear Department for Work and Pensions,

Thank you for your detailed reply.

You mentioned what happens to people where the survivor and the person who died both reached state pension age prior to 6 April 2016 under the old state pension.

Can you now tell me what happens under the following scenarios.

1) The person who died with a GMP reached state pension age under the old state pension and dies on and after 6 April 2016 where the survivor reached state pension age under the new State pension. Is 50% of the GMP deducted?

2) They both reached state pension age under the New State pension and the person who died was previously contracted out with a GMP. Is 50% GMP deducted ?

In your email you showed in the paragraph below this paragraph and you mentioned by being contracted out they and their employer paid lower national insurance and that for final salary schemes between 1978 and 1997 and to do this the the scheme was expected to provide a GMP. I would like to point out that this was not an additional occupational pension as it came out of the employees existing pension entitlement and was not extra pension. You also mentioned they were providing it for the additional state pension forgone.

"Under the old State Pension rules up to 5 April 2016, people were able to contract-out of the
additional State Pension. This meant that they and their employer could pay lower National
Insurance contributions into the State system. They could only be contracted-out of the additional
State Pension if their scheme met certain minimum standards. For salary-related schemes,
between 1978 and 1997, they were expected to provide a Guaranteed Minimum Pension (GMP)
in place of the additional State Pension which they would forego. "

You mentioned the in the following paragraph that people have benefited by lower national insurance contributions Can you explain why and how they benefited from lower National Insurance as the were made to forgo any SERPS pension they would have been entitled to and any inherited SERPS pension they would have been entitled to .

"If someone was contracted-out for periods prior to April 1997 they still build up SERPS, as if they
had not been contracted-out, but we then take into account the lower National Insurance
contributions they have benefitted from whilst working by applying a contracted-out deduction. If
there is any net additional State Pension after this calculation, then this is paid as part of the
individual’s State Pension. "

Yours faithfully,

C. Thompson

DWP freedom-of-information-requests, Department for Work and Pensions

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Dear C Thompson,

I am writing in response to your request for information, received 8th
December.

Yours sincerely,

DWP Central FoI Team

Dear Department for Work and Pensions,

Thank you for your reply of the 19 December.

In your reply to question 1 you mentioned "The rate of the Category B state pension in this case will take into account a deduction of 50% of the deceased person’s GMP where a GMP was in payment to the deceased.

Can you please send me information available to the public that explains in plain English why 50% of the inherited GMPs will be deducted from their own additional state pension if they had always been contracted in .

In your reply of the 4 December you mentioned the following.
"If someone was contracted-out for periods prior to April 1997 they still build up SERPS, as if they
had not been contracted-out, but we then take into account the lower National Insurance contributions they have benefitted from whilst working by applying a contracted-out deduction. If there is any net additional State Pension after this calculation, then this is paid as part of the individual’s State Pension. "

Can you please send me any information that explains why and how a member has benefited from paying a lower National Insurance Contribution as they they were made to forgo any entitlement to additional state pension.

You mentioned that they build up SERPS as if they had not been contracted out which is a notional figure and not actual from which is deducted a contracted out deduction.

Yours faithfully,

C. Thompson

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Dear C Thompson,

I am writing in response to your request for information, received 20th
December.

Yours sincerely,

DWP Central FoI Team

Dear Department for Work and Pensions,

Please pass this on to the person who conducts Freedom of Information reviews.

I am writing to request an internal review of Department for Work and Pensions's handling of my FOI request 'Do Widows and widowers have money deducted from their state pension if their spouse or civil partner who has been contracted dies before them'.

Hi,

Thanks for your reply of 8 January 2024.

"Can you please send me information available to the public that explains in plain English why 50% of the inherited GMPs will be deducted from their own additional state pension if they had always been contracted in .

"If someone was contracted-out for periods prior to April 1997 they still build up SERPS, as if they had not been contracted-out, but we then take into account the lower National Insurance contributions they have benefitted from whilst working by applying a contracted-out deduction. "
You mentioned

DWP Response We confirm that we hold some of the information you have requested. However, the information is exempt under Section 21(1) of the Freedom of Information Act because the information is reasonably accessible to you, as it is already in the public domain.

Are you telling me that there is nothing in DWP or Gov.uk websites that can answer my question?. So all you can direct me to is what is mentioned in House of Commons BRIEFING PAPER Number CBP 8635, 6 April 2021

I note it mentions the following. "The rationale is that the contracted-out occupational pensions were funded through reduced NI contributions:" Is this correct? I thought the reason employer and employee paid reduced NI was to compensate for the state additional pension forgone by the employee. So can you please send me something from a DWP /Gov.UK web site that mentions that NI rebate was used to fund contracted out occupational pension schemes. as mentioned in the House of Commons Information Pack BRIEFING PAPER Number CBP 8635, 6 April 2021.

Please note on page 4 it mentions "Please note that nothing in this paper should be considered as constituting legal advice. It is not intended to address the specific circumstances of a particular individual. A suitably qualified professional should be consulted if specific advice or information is required.`

However, in relation to your first request, to be helpful, you may find the information contained at page 9 of the House of Commons Briefing Paper on Inheriting Pension Rights useful: Inheriting pension rights (parliament.uk).

In relation to your second request, contracted out employees and their employers paid lower National Insurance than those who were not contracted out. I am again mentioning again that that ee and ers paid lower NI for the state additional pension forgone and it has nothing to do with the GMP being provided by the occupational pension scheme. All the scheme was having to do was eo promise that the occupational pension scheme would not pay a pension less than the additional state pension forgone. In return schemes provided their members with a Guaranteed Minimum Pension (GMP). Information about the calculation of the GMP can be found here: https://www.gov.uk/guidance/how-to-calcu...

Can you please send any information you have from DWP or Government websites that mentions the NI reduction is because of the state additional pension forgone or that the contracted out occupational pension contracted out element is funded through reduced NI contributions.

A full history of my FOI request and all correspondence is available on the Internet at this address: https://www.whatdotheyknow.com/request/d...

Yours faithfully,

C. Thompson

DWP freedom-of-information-requests, Department for Work and Pensions

Thank you for contacting the Department for Work and Pensions (DWP).
 
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Dear C Thompson,

I am writing in response to your request for information, received 9th
January.

Yours sincerely,

DWP Central FoI Team