Millions of pensioners have increased their state pension payments by thousands of pounds annually through inheritance rule.
In the 2023/24 tax year, over two million pensioners (approximately 2,027,440) received payments from the inherited state earnings-related pension scheme (Serps), a part of the old state pension system.
Around 541,760 pensioners received more than £5,000 a year in inherited Serps payments, including 17,460 who received more than £10,000.
Surviving spouses and civil partners can inherit part of their deceased partner’s additional state pension, which is paid on top of their own state pension once they reach state pension age.
Sarah Pennells, consumer finance specialist at pension provider 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 maximum annual inherited Serps entitlement for surviving partners is £11,356.28 (£218.39 per week) for the 2024/25 tax year, up from £204.68 per week in 2023/24.
In the 2023/24 tax year, the average annual inherited Serps payment was £3,377, with some pensioners potentially receiving over £20,000 a year in combined state pension income.
A new state pension system was introduced in 2016, focusing on individual entitlements. However, the legacy of Serps continues to provide additional income for many retirees.
Ms Pennells warned that despite over two million people receiving these inherited payments, others may not be claiming their full entitlement.
She said: “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 also encouraged pensioners to reach out to the Pension Service for clarification. She said: “If you’re in doubt about your inherited Serps entitlements, then you should contact the Pension Service to find out what you should be receiving.”
The figures were obtained through a Freedom of Information (FOI) request by Royal London.
