State pension rules may lead to unexpected financial shocks for retired couples, analysis reveals.
A little-noticed change, which came into effect in 2016, means a typical pensioner’s household income could plummet by up to 66 per cent following the death of a partner.
It could leave many struggling to make ends meet because bills would only fall by a small amount.
Under the old system, a dead spouse’s National Insurance record was part of calculations for their widow or widower.
Now it is based on the claimant’s NI records only.
Former pensions minister Sir Steve Webb, now director of policy at insurer Royal London, said: “Under the new system, widows and widowers will inherit little, if anything, of their late spouse’s pension, and income from an annuity often ceases when the recipient dies.”
