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Welfare Reform and Pensions Act 1999

Commentary

Section 56: Additional Pension

Section 56 inserts a new section – section 48BB – into the Contributions and Benefits Act. This provides for the amount of Additional Pension (State Earnings Related Pension – SERPS) that widows and widowers should receive when they reach pensionable age, based on their spouses’ contributions.

Legislation is already in place to ensure that those who are widowed, whether men or women, are able to use “substitution” provisions to help them achieve a basic Retirement Pension if their own contribution record during the period of marriage is inferior to that of their spouse. Section 48 of the Contributions and Benefits Act provides for circumstances in which a former spouse’s contributions can be treated as if they were those of the pensioner, and section 52 contains additional provision for surviving spouses.

Under the existing scheme, widows who receive Widowed Mother’s Allowance or Widow’s Pension are paid an amount of Additional Pension with their weekly benefit, based on their husbands’ contribution records. This benefit continues until they reach pensionable age. They are then entitled to a “Category B” Retirement Pension (i.e. a pension based on their husband’s National Insurance contributions) paid at the same level.

The new scheme is different, in that Bereavement Allowance is to be paid for 52 weeks only, and without any Additional Pension (see commentary on section 55 of this Act). So, unless they are still receiving Bereavement Allowance or Widowed Parent’s Allowance when they reach pensionable age, future widows and widowers will have a period before retirement when they are not receiving any bereavement benefit or Additional Pension.

But the intention is that, once they do reach pensionable age, and provided they have not remarried, they should have the same amount of Category B Retirement Pension as if they had been receiving a benefit with Additional Pension continuously since their date of bereavement. That is to say, their Retirement Pension should be exactly the same as if they had been claiming under the current system. Therefore, this section provides for the same entitlement rules, but by reference to the new bereavement benefits.

Commentary: the inserted section 48BB

The inserted subsections (1) and (2) relate to widows and widowers who are still receiving Widowed Parent’s Allowance when they reach pensionable age. The subsections entitle them to a Category B Retirement Pension, on the basis of their spouses’ contributions, at the same weekly level as their Widowed Parent’s Allowance.

The inserted subsections (3) and (4) relate to widows and widowers who were previously entitled to Bereavement Allowance or were aged over 45 when they stopped being entitled to Widowed Parent’s Allowance. When they reach pensionable age, they will also be entitled to a Category B Retirement Pension on the basis of their spouses’ contributions—calculated by the same rules as if they had been receiving Widow’s Pension. The inserted subsections (5) to (8) provide these rules.

The inserted subsection (7) corresponds to the new section 39C(4) inserted by section 55 (above), and provides the 50% reduction in Additional Pension for cases where the spouse dies after 5th April 2000 (see also commentary on section 52 of this Act).

The inserted subsections (8) and (9) contain the same age-related calculation as new section 39C(5). They reduce the amount of Additional Pension by 7% for every year the bereaved spouse was aged below 55 either

  • when their spouse died and they became entitled to Bereavement Allowance; or

  • when they stopped being entitled to Widowed Parent’s Allowance.

In both cases they must have been at least 45 years old to qualify (so the maximum reduction is by 10 years, or 70%).

The inserted subsection (10) raises the amount of Additional Pension to the same level as if it had been increased by the annual uprating order every year since the date of the spouse’s death.

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