State Pension Inheritance Rules for Unmarried Couples
Many private pensions schemes can now be inherited by cohabiting partners by simply stating your next of kin in the death benefit nomination forms, however the UK state pension system is different and entirely based around legal marriage or civil partnership.
In the UK over six million people are living together as couples, but the UK pensions and benefits system is based exclusively around legal marriage and more recently civil partnerships.
Recently, the UK Government has been successfully challenged in the courts about discrimination against cohabiting couples in the National Insurance system, but both judgments related to the specific case of bereavement benefits for people of working age.
The 1st defeat for the Government was in August 2018 when an unmarried mother of four successfully challenged the government over its refusal to pay the old ‘widowed parents allowance’ because she was not married to her partner.
The Supreme Court found against the Government, but the Government failed to take any action in response.
Subsequently, a 2nd court case was brought by the Child Poverty Action Group on behalf of two bereaved fathers who had been refused the new Bereavement Support Payment because they were not married to their partners.
In February 2020, the High Court ruled in favour of the two fathers, agreeing that it was discriminatory to exclude them from benefit simply because they were not married.
As recently as March 2020 the Government was planning to appeal against this judgment, but it has now said it will not appeal.
It is likely, that the Government will now come up with proposals to include cohabiting parents into eligibility for bereavement support payments, though nothing has been scheduled yet.
However, there is no news so far that the Government plans to extend the principle of cohabiting to the inheritance of UK state pensions.
The recent court cases were very specifically about the case of bereaved parents and a lot of discussion was around the way in which children were being penalised for the fact that their parents were not married.
If there were to be a legal challenge regarding state pension inheritance it may be that the Government would argue against any change going forward precisely because civil partnership is now an option for opposite sex couples.
The Department of Work and Pensions may argue that since cohabiting couples now have an alternative to marriage which would allow them to be within the confines of inheritance under existing law, there is no need for any further changes to the law.
Therefore, older cohabiting couples may like to consider whether registering a civil partnership would be advisable so that a surviving partner automatically inherits any share of their late partner’s state pension.
But there are still some lingering problems for cohabiting couples when it comes to bereavement pensions in certain occupational pension schemes. A death benefit nomination forms must be in place and kept up to date to ensure any benefits are passed to the nominated person.