Widows may receive a “very modest” state pension, causing “financial shock.”
Bereaved widows have been told that under new guidelines, they may receive little or no of their late partner’s state pension.
The consultancy LCP has warned couples to make sure they are prepared because widows may see their standard of living plummet in addition to losing long-term spouses.
The 2016 rules repealed provisions that allowed women to collect pensions based on their late or ex-husbands’ contributions.
Women used to have to put up with standard of living losses of roughly 9% under the old system, but now they are projected to see a staggering 24 percent drop in standard of life.
“Coping with loss is difficult enough, but coping with a significant drop in living standards afterward is considerably more difficult,” said Steve Webb, a partner at LCP.
“While the new state pension pays more to women in their own right at retirement than the old system, widows and widowers are severely underserved.”
Although male widowers face the same lack of protection as female widowers, they may have received the lion’s share of the couple’s total pension income and will be able to support themselves.
This is also known as gender pension inequity, because it is a result of women earning less money throughout their lives than men, limiting their ability to save as much for retirement.
Mr Webb urged newly retired couples and those approaching retirement to find out where they stand with state and private pensions if one of them died, and to consider making additional provisions to cushion the financial burden of grief.
“This is one of those situations where forewarned is forearmed,” said Darren Cooke, a chartered financial adviser at Red Circle Financial Planning.
“Just being aware of the potential shift in income if one of the partners dies allows the pair to plan ahead and explore how the widow(er) might cope.
“In early retirement, the couple should avoid taking on debt because even little interest payments might add up to a significant portion of a reduced income. Also, be wary about depleting savings too rapidly, as they may be better used supporting the survivor after income begins to dwindle.
“It’s also important to have a chat with the rest of the family to let them know what would happen if one of them dies.”Brinkwire Summary News”.