Pensions: Money Box caller talks impact of age differences
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Rose and her husband John were married for 40 years with two children. As his widow, she expected to receive half of his pension, but she had an unpleasant surprise. Rosie met her husband at work, and they got married in 1973. She was 20 years old at the time, and he was 45 so there was an age gap of 25 years.
On BBC Money Box last weekend, Rosie explained her situation.
When John suddenly died in October 2018, she expected to receive 60 percent of his pension as his widow, as he had expressed this in a written statement to his pension providers.
In the first pension, John had left just over £3,000.
Unfortunately, Rosie only received £1,200, when she had expected to receive almost £1,900.
There was a second pension he was involved with from work.
He had saved £21,300 and Rosie expected to receive at least 50 percent of this due to written statements he had agreed to.
Rosie should have received £10,600; however, she was only rewarded just over £7,800.
She said: “That obviously came as a shock when you’re least prepared to cope with things really.
“Both companies said that because there was an age difference of over 10 years, they were entitled to deduct 2.5 percent for every complete year of age difference.”k
There was a discretionary clause in both pensions stating that providers could enforce a young spouse rule and they both chose to do that.
This meant a cut of 40 percent of what Rosie was expecting.
She continued: “Over a year it means £3,500 less than I would have expected, and more to the point what he had expected because he had paid in AVC, the additional contribution to boost his pension.”
The younger spouse rule is “common” in defined benefit pension schemes in the UK, one of the pension providers explained.
The Pensions Ombudsmen Service also said they had followed the rules in Rosie’s case.
Rosie added: “They probably did follow the rules, but they were discretionary rules so why was there no discretion involved.
“I was very upset, and then I confess rather angry, and also I felt somewhat insulted.
“We had a long and very happy marriage and there was a slight implication that perhaps this might be for my financial benefit having just lost my husband.
“I found it very difficult to bare at the time.
“If John was aware of these rules, he would have considered not investing in the pension scheme and doing something else.”
Rosie was offered a £500 settlement from one of the pension providers due to the distress and inconvenience it had caused her, but she has not claimed this and does not intend to.
She said: “It’s not about the money, it’s about the principle.
“There will be people in a similar position who aren’t going to find out until the worst happens.
“I feel it ought to be more publicised really.”
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