If she enters into a civil partnership with a close friend, will that affect her state pension? Steve Webb replies
Me and my best friend from many years ago share our lives and left everything to each other at our will.
My girlfriend is 73 and became eligible for her state pension at the age of 60. The amount was calculated using her ex-husband’s NI contributions. They divorced in the seventies.
I am 68 years old and I am receiving a state pension. We are studying the benefits of a civil partnership but have concerns about whether this will affect the amount of my friend’s pension.
Will it be changed by a civil partnership and will any subsequent death benefits be affected? No one seems to be able to advise us on this matter. thank you.
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Financial Planning: If she enters into a civil partnership with a close friend, will it affect her state pension?
Steve Webb replies: I get a lot of questions from people asking how changing their relationship status later in life will affect their pension and government benefits, so I’ll cover your specific situation as well as answer more broadly.
The first thing to say is that for most practical purposes, the registration of a civil partnership is treated by the government like a marriage.
Civil partnerships were originally available to same-sex couples but have recently been expanded to include opposite-sex couples, and provide a way for spouses to register their relationship without going through the marriage process.
I see that your girlfriend was divorced when she reached retirement age, and that she is under the “old” government pension system.
Under this system, if a person was divorced when he reached retirement age, his state pension can be calculated on the basis of the ex-spouse’s NI contribution history up to the date of divorce.
This should actually happen and should help increase your friend’s pension entitlement.
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The good news from her point of view is that even if she gets married or forms a civil partnership, her state pension will continue to be paid at the same rate as before.
You are also asking about the issue of death benefits.
For a divorced woman, like your girlfriend, the way the old system works is that she has been taking full advantage of her ex-husband’s NI contributions in terms of her base pension since she started drawing her state pension.
So there is nothing else he inherits when he dies. This does not change if she were to now form a civil partnership with you.
Another point to be aware of is that under the rules of the old state pension system, those who married or formed a civil partnership after retirement could receive new death benefits from their new partner.
However, these provisions largely apply only to those who married or registered a civil partnership prior to the change of rules on April 6, 2016.
Some people on low incomes may also need to think about how their choices will affect any benefit they receive such as pension credit or housing benefit.
In the case of financial-tested benefits, what matters is not whether you are married or in a civil partnership but whether or not you form a single family.
You mentioned that you share your lives, and if you already live together, the benefits authorities will actually treat you as a couple regardless of your official status.
But if you plan to move in together along with forming a civil partnership, you will now be treated as a married couple and your combined income will be used in any assessment of the tested benefits.
Ask Steve Webb a question about pension
Former Pensions Secretary Steve Webb is this money torment uncle.
He’s ready to answer your questions, whether you’re still saving, in the process of laying off work, or fiddling with your money in retirement.
Steve left the Department of Work and Pensions after the May 2015 elections. He is now a partner at the actuary and consulting firm Lane Clark & Peacock.
If you would like to ask Steve a question about pensions please email him at [email protected]
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Stevee receives many questions about state pension expectations and COPE – Contractual Contractual Equivalent. If you write to Steve about it, it answers a typical reader’s question here. Includes links to many of Steve’s previous columns on government pension expectations and outsourcing, which may be helpful.
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