State pensioners having payments deducted by DWP due to 'weird quirk'

State pensioners have been warned over a little-known mistake which could see the Department for Work and Pensions slash their payments. DWP state pension payments could be slashed – with thousands affected - due to a common error.

Widowers receiving the old state pension are being stung with deductions after inheriting their partner's pensions. Thousands are being stung with deductions because, under the previous rules, people could inherit some of their partner or spouse's additional state pension if they died.

Partners could only pass over the additional state pension if they were on a company pension scheme and "contracted out". It meant they transferred some of their National Insurance contributions from their basic state pension to a private pension.

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But it also meant old state pension payments had deductions taken from it because it was missing the NI contributions, it has been warned. Widows who took on the additional state pension from their partners when they became bereaved also took on the deductions.

So anyone who has reached state pension age but is already receiving the maximum amount each week are actually worse off thanks to the "weird quirk", Alice Guy, head of pensions and savings at Interactive Investor, said. She added: "The confusing rules meant that some widows could end up with less money after their husband died.

"The new state pension, for those who retire after April 2016, doesn’t include these complicated rules as each person builds up their own state pension entitlement which can’t be passed on to a spouse."

To get the full new state pension (currently £221.20 a week), you'll likely need at least 35 qualifying NI years (though some will need many more). Crucially, you don't have to start from scratch from 6 April 2016 – any qualifying years earned before this date will count along with later years.