Should my mum claim state pension or stay on Severe Disablement Allowance?

My parents had been married for 60 years when my dad died last September.

I would like to know if my mum is better off claiming her state pension, as she never claimed when she was 60 and she is now 85, or staying on her Severe Disablement Allowance which is now worth £90.95 per week plus Attendance Allowance of £247.40 a month.

When she turned 60 she did enquire whether she would be better off claiming her pension, but the Department for Work and Pensions said the SDA was worth a few pounds more.

Mum has 23 state pension qualifying years. She has called the DWP twice and I have called once without getting an answer to whether my mum would be better off with her state pension than the SDA, and could she claim on my dad’s contributions (he has paid full contributions).

The staff member on the last call said she would email someone else and we were to ring again if we didn’t hear anything else by the end of March. We have had no answer.

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Steve Webb replies: I was very sorry to hear about your recent bereavement and the problems that you have had in resolving your mother’s pension entitlement.

I think that your mother should be getting much more than she is currently being paid and it shouldn’t have taken this long for them to sort it out.

Your mother is affected by a corner of the benefits system known as the ‘overlapping benefits rules’.

The idea of these rules is to stop someone getting two different benefits for the same purpose.

To give a simple example, if someone gets benefit for being unemployed and then becomes too sick to work, they cannot get both Jobseekers Allowance (for unemployment) at the same time as Employment Support Allowance (for sickness), as they are both designed to do the same thing – give you an income when you cannot work.

Did you miss out on a state pension lump sum if you were widowed?

 

This is Money’s columnist Steve Webb calls on elderly widows who might have missed out on a backpayment when their husbands died to get in contact. 

He wants to help people get money that is rightfully theirs, and find out if there is a systematic problem not picked up in the Government’s massive correction exercise for elderly women who were underpaid. 

Find out if you could be affected, and how to contact Steve here.

> Did you miss out on state pension if you were widowed in retirement? 

Turning to your mother’s specific case, when she reached pension age she was on an old benefit called Severe Disablement Allowance.

This used to be payable to those who were too sick to work but didn’t have enough National Insurance Contributions to qualify for a National Insurance benefit.

When she reached pension age, your mother had the choice between staying on SDA or going onto retirement pension. Because of ‘overlapping benefit’ rules she could not receive both at the same time.

For some people it made sense to stay on SDA. There are two main reasons for this.

The first is that SDA is worked out in a different way to state pension and some people may be entitled to more in SDA than in state pension.

The second reason to favour SDA is that it is not taxable, whereas retirement pension is subject to tax.

In your mother’s case, it’s quite possible that when she first retired it was the right decision to stay on SDA.

However, just because it was the right idea at the time, it doesn’t mean that this couldn’t change later in retirement.

In particular, when your mother turned 80 it would have been worth considering claiming a state pension at that point, and in particular now that she has been widowed.

Starting with when your mother turned 80, at that point she could have claimed something called a ‘Category D’ non-contributory pension for anyone aged 80-plus who satisfies a basic residence test.

The current rate of that pension is £93.60 which is slightly higher than the SDA figure that you quote

If so, I would suggest that she makes a backdated claim for a state pension. This can be backdated for 12 months and would give her a few pounds extra per week for that period.

More importantly, now that your mother is sadly widowed, she can claim a state pension based on her husband’s contributions.

This would typically be a full basic pension, currently worth £156.20 per week (assuming your late father had a full contribution record).

She may also inherit some or all of any ‘additional’ state pension he was receiving.

The crucial thing is that your mother puts in a claim to state pension, as they will not pay any state pension unless a claim has been made.

More generally, I would encourage anyone in retirement who currently receives SDA to check what state pension rate they could receive if they switched to state pension.

They should however check that stopping claiming a disability benefit (SDA) and switching to retirement pension would not affect any other benefits they receive as a result of being on a disability benefit.