A partner passing away is, of course, a distressing situation that leaves many wondering how they will cope. As well as the emotional difficulties you face in this situation, you may also be asking how you will be able to support yourself financially. You can find some comfort in the fact that you may be eligible for bereavement support, sometimes known as a widow’s pension, which could be valuable if you were financially dependent on your deceased partner.  

This, of course, brings up all sorts of questions, including “who qualifies for a widow’s pension?” and “how much is a widow’s state pension?”. Here we look to answer some of these questions so you know whether you are eligible, how much you could receive, and for how long? 

What is a widow's pension?  

The term widow’s pension is slightly outdated, as the benefit referred to as the “widow’s pension” was phased out in April 2001 and replaced by Bereavement Support Payments (BSP). However, you might still hear people using the old term to refer to this. BSP is financial support that you receive after the passing of a partner. 

The original widow’s pension was available until the widow turned 65, or they remarried or retired. This is a key difference with the modern BSP which is only payable up to 21 months after your partner passes away, or until you reach state pension age.  

In addition to the difference in length of payment, BSP is available to all widowed partners (whether married or in civil partnerships), regardless of their gender. Crucially, following a successful debate in the House of Commons in February 2023, this payment by law can now extend to those who were living together, but were not married or civil partners. This previously restricted a large number of couples, but the modernisation of this scheme is welcome and is expected to open the payment up to around 21,000 families to claim.

How much is a widow's pension? 

In order to qualify for a Widow’s Pension your partner must have paid National Insurance contributions, or their death must have been related to their job.

Bereavement support payment is paid in monthly instalments, and the amount that you receive will depend on whether you have children or not. Those without children will receive up to £100 every month, whereas this amount can increase to £350 if you have children. This lasts for 18 months.

In addition to the regular widow’s pension, you may also be eligible for a one-off Bereavement Support Payment. This is usually a tax-free lump sum of £2500 but increases to £3500 if you have children. 

You do not need to worry about tax with this payment; UK regulations dictate that this support is tax free, while it’s also important to note that it’s not included in the benefit cap. This means that you don’t need to take this into account when you’re applying for any other means-tested benefits. If you get benefits, BSP will not affect your benefits for a year after your first payment. After a year, money you have left from your first payment could affect the amount you get if you renew or make a claim for another benefit. 

You must tell your benefits office (for example, your local Jobcentre Plus) when you start getting BSP. 

Am I eligible to claim Bereavement Support Payment?

You do not need to be over a certain age to receive Bereavement Support Payments. However, payments cease once you are over state pension age.
To qualify:

• You must be below the state pension age when your partner passed away and living in the UK or another country that pays bereavement support.
• Your partner paid National Insurance contributions for a minimum of 25 weeks within one tax year since April 1975 or died under circumstances relating to their work.
• Your partner must have passed away within the last 21 months. If you do not claim within the first 3 months after their death, then you will not be eligible to receive the full amount.

As it currently stands, Bereavement Support Payments are not means-tested, so if you’re wondering “how much is a widow’s state pension?”, then this only depends on whether you have children or not. You’ll be eligible for the higher rate if you have children that you support.

When should I apply for Bereavement Support Payment?

If your partner died after April 2017, then Bereavement Support Payment is paid for up to 18 months after your spouse or civil partner passed away, so it’s important that you claim as soon as possible to avoid missing out. You must claim within 3 months of your partner passing away to receive the full 18 payments.

How to claim Bereavement Support Payment

To apply for Bereavement Support Payment, you can do so through the UK Government website, by telephone, or via post. You may need to provide details such as your partner’s National Insurance number, proof of death, and bank account information to process the claim.

Can a widow claim pension credit?   

Pension Credit is a government initiative that is designed to provide elderly people on a lower income with extra money to cover living costs. To qualify for pension credit, you will be means tested and you must be over the state pension age. In addition, you can get assistance with housing costs such as ground rent and service fees. It’s something that you should factor into your long-term care planning for older age, as it can provide important help to lower income retirees.  
 
Widows are eligible to claim pension credit just like anyone else. Eligibility is based on your age and income, and you may also receive additional support if you are a carer, have a disability or are responsible for a young person. Widow’s pension and bereavement support have no effect on your ability to apply for pension credit. If you get benefits, Bereavement Support Payments will not affect your benefits for a year after your first payment. After a year, money you have left from your first payment could affect the amount you get if you renew or make a claim for another benefit. 

So, in summary, a widow’s pension does not actually exist in the UK anymore but has been replaced by Bereavement Support Payments. However, you might find people still call these payments a ‘widow’s pension’. These payments are made in monthly instalments. 

Finally, receiving Bereavement Support Payments does not affect your eligibility for pension credit. In fact, the two are mutually exclusive, since only those above pension age can claim pension credit, and only those below pension age can claim Bereavement Support Payments.  

If you think you might be eligible for a widow’s pension, but aren’t entirely sure, it may be a good idea to speak to a financial adviser. The Private Office can help you understand your options for retirement and provide you with pension advice that is suited to your individual needs and circumstances. Contact us today to see if we can help.   

Arrange your free initial consultation

Pensions are a long-term investment; investment returns are not guaranteed, the value of your investments can go down as well as up and you may get back less than you originally invested. 

The information provided in this article is based on the current allowances and legislation and is subject to change.

The Financial Conduct Authority (FCA) does not regulate tax advice.

It is fair to say, the last seven years or so have brought multiple periods of market uncertainty. It feels relevant to reference 2018, the year of Trump vs China’s trade war which has once again reared its ugly head in 2025 with Trump’s ‘liberation day’ and the uncertainty that has brought to investment markets. Outside of these events we have had a pandemic, multiple geo-political conflicts, and a lengthy period of increased inflation whereby central banks around the world had no choice but to raise interest rates in an attempt to curb and reduce inflation over time. In some regions the rhetoric had been ‘higher interest rates for longer.

With the above in mind, it feels more important than ever for clients to have an understanding of the financial track they are on and where this is headed. Our existing clients will know that what serves as the foundation of this understanding is cash flow forecasting. This is such an essential tool in ensuring your wealth is segmented in such a way that enables you to make sure that the risk associated with investment markets can be managed as best as possible. 

Arrange your free initial consultation

Have your retirement plans been derailed?

For those not fortunate enough to have a guaranteed, and usually inflation linked, retirement income provided by a generous Final Salary pension scheme, many prospective UK retirees are reliant on Defined Contribution (sometimes called Money Purchase) pension plans to provide for them when they stop working. 

Unlike old-style Final Salary schemes, where all of the investment risk is borne by the former employer, Defined Contribution pensions are invested on an individual basis into global stock markets. Plan holders are then reliant on a combination of long term market returns and the wonders of compound growth to increase their retirement pot to a value that will allow them to achieve their desired level of expenditure in retirement. 

Thanks to auto-enrolment rules introduced by the Government in 2012, many people’s retirement funds have accrued without them so much as opening an account. Clearly, some people have a far greater interest in managing their pension’s underlying investments than others, with the rise of online DIY platforms this has made it easier to do than ever, with many platforms offering unlimited trades and special offers on new fund launches.

For those less interested in becoming the next Warren Buffett, your pension provider may have kindly sorted this all for you! The vast majority of workplace pension schemes are invested in a “lifestyling” strategy as default. This aims to put scheme members into riskier assets, like equities earlier in their careers to benefit from the greater levels of return that they have experienced historically. As a member moves closer to their nominated retirement age, the pension provider automatically reduces the level of riskier assets in the plan in favour of more conservative alternatives. The result is that the pension should be sat in one of the safest asset classes – usually government bonds or sometimes cash at their chosen retirement date, ready for the member to access their funds without being subject to the whims of market volatility. 

How does lifestyling work?

Sounds great, right? How good of your pension provider, looking after that pot from that job in your twenties for all those years. If you’re beginning to get the sense that all of this sounds a little too good to be true, then that’s because it sort of is!

“Lifestyling” funds are fundamentally flawed for a number of reasons:

The first, is that the above strategy only works if the assets assumed to be risk free, actually are. The 2022 “Mini Budget” from Liz Truss and Kwasi Kwarteng brought it sharply into focus that bonds are not a risk-free asset. Some difficult conversations had to be had for individuals whose pensions had mostly lifestyled into bonds and cash and had thought because of this their pensions were secure. It even caused some to reconsider their retirement plans and put them off for a couple of years.

Another issue with lifestyling is that your workplace pension providers are understandably following the same glide path for everyone. Retirement planning is much more nuanced than this but workplace pension providers such as Royal London, Scottish Widows, Aviva, Aegon etc do not have the capacity to speak to each of their customers and understand what they actually need their pension pots to do for them over the long-term, from an income and lifestyle perspective.

The last issue we would like to highlight with lifestyling, is that the notion of having a pension entirely de-risked ready for the day you retire only makes sense if you are planning to use the whole pot to purchase an annuity. Due to rises in bond yields, annuity rates increased steadily from 2022 to the extent that they now present an option worth considering for certain retirees, for the first time in many years.

With this being said, annuities are by no means right for everyone. For many people, drawing upon their pension pot(s) flexibly, either through regular income payments or ad hoc withdrawals, will be the way in which they access their retirement funds. 

The ONS estimates that someone at the average retirement age of 65 in the UK in 2025 can expect to live to on average a further 20 years for men on average, and 23 years for women.

This means two things; firstly that there is good chance that your pension will need to last you at least 20 years, but potentially much longer; and secondly, and related to the previous point - some of your pension may not be touched for another 20 years. Therefore, this element of your pot should not take the same level of risk and have the same investment strategy as the money you will be drawing upon in the first few years of retirement, which should be sat in cash ready for you to access.

Segmenting your pension into different pots: the three pot plan

This is by no means anything ground-breaking; by segmenting your pension across different strategies, you are simply taking advantage of timescales. This means that your longest term money can work harder for you, but that the money you need to fund the next few years of living is sat in cash, taking no investment risk. 

It may not always be the case that individuals hold significant levels of cash personally, in bank or building society savings or national savings and investment accounts. Nevertheless, holding cash for short-term income requirements can still be achieved. How? By holding a modern Self-Invested Personal Pension (SIPP) which can hold some of its investments in cash accounts or Money Market portfolios. 

By holding a few years’ worth of expenditure in cash you give yourself time to ride out any of the shorter-term volatility in markets, meaning you are never forced to sell down upon your invested wealth at an inopportune time in market cycles in order to fund your day-to-day expenditure needs. Luckily, with interest rates still relatively high, the returns from holding cash are far better than anything we saw for many years. 

As the above illustrates, planning appropriately is vital in ensuring sustainability throughout what will hopefully be a long and enjoyable retirement. Making sure that a robust retirement strategy is in place well in advance of actually retiring will allow your money to work as hard as possible for you, whilst also ensuring that you can continue to live your dream retirement without the need to worry about the ups and downs in markets.

Retirement Calculator

A useful tool to get a basic understanding of how much you may need is our retirement calculator. From your own inputs, you will be able to forecast an estimate of the pension income you will get when you retire and receive a target retirement income to aim for based on your choices. 

How can we help?

The above is purely an example of a tool we always use with our clients, cash flow modelling. This is especially useful to both us and our clients at determining what they need their assets to do for them over the long-term and identify the different time horizons ahead of them before accessing certain proportions of their wealth.

If you’d like to learn more about how you can plan your own comfortable retirement, why not get in touch and speak to one of our advisers. We’re currently offering anyone with £100,000 in pensions, savings or investments a free initial consultation worth £500.

Arrange your free initial consultation

The information in this article is based on current laws and regulations which are subject to change as at future legislations.

A pension is a long term investment. The fund value may fluctuate and can go down. Your eventual income may depend on the size of the fund at retirement, future interest rates and tax legislation. 

The Financial Conduct Authority (FCA) do not regulate estate or cash flow planning, or tax advice.

Pensions, like most forms of income, incur taxes. However, there are ways to ensure you’re not unnecessarily overpaying in tax, even when you’ve retired.

Do you pay tax on your pension?

The short answer to this question is yes, so long as your pension exceeds the minimum threshold for paying income tax.

Arrange your free initial consultation

Income from a pension is taxed exactly like any other form of non-savings income. Firstly, everyone has a personal allowance, which is the amount of money you’re allowed to earn each year before you start paying income tax. Currently, the personal allowance is £12,570 (though this may be reduced if you have earnings above a certain level), so if you receive less than £12,570 per annum of taxable income, then you pay no income tax. Once your taxable income goes above this level you become liable to pay 20% income tax on taxable income between £12,571 and £50,270 per annum. This then increases to 40% income tax for taxable income between £50,271 and £125,140, and 45% beyond that. These income tax rates are valid as of 2024. For updated and current tax rates, see our latest tax tables. 

It’s worth noting however, under certain circumstances, you do not need to pay tax on all of your pension income. Additionally, there are strategies you can adopt to minimise the amount of tax you pay on your pension. 

How much will I be taxed on my pension?

Another frequently asked question is “how much tax do you pay on your pension?”. As stated above, the amount of income tax you pay on your pension depends how much income you draw from your pension.

The good news, is that some of your pension is, in fact, tax free. If you have a defined contribution pension, whereby your pension is based on how much you and/or your employer have saved into it — which is the most common kind — then you can take out 25% of your pension completely tax-free, subject to a max of £268,275, this is known as the Lump Sum Allowance (LSA).

It is important to understand that, although possible, this does not need to be taken out as one single lump sum. It is possible to take out multiple smaller lump sums each with 25% tax-free, or just take portions of tax-free cash over time rather than all at once (known as phasing), as long as your pension allows for ‘flexi-access drawdown’. The remaining 75% will be taxed according to the standard rules explained above.

If you are only receiving the new state pension, on the other hand, then you do not need to worry about income tax. As of 6th April 2024, the full new state pension is £221.20 per week, or £11,502.40 per year  — since this amount is within your personal allowance there will be no income tax to pay. Most people who have worked throughout their lifetime will be eligible for a state pension, although the amount you receive will depend on your national insurance record.

However, if you have income from other sources bringing your yearly income higher than £12,570, then you may be expected to pay income tax.

What other forms of tax for my pension should I be aware of?

Income tax is the main tax you can expect to pay on your pension. Previously the lifetime allowance, stood at £1,073,100 and additional tax may have been due if your pension exceeded this limit. However, in the Spring Budget 2023 it was announced that the charge and the lifetime allowance itself would be removed entirely as of the 2024/25 tax year, while a 0% charge would apply to any excess pension above the lifetime allowance in the 2023/24 tax year. There is, naturally, political risk of legislation changing with regard to this tax charge.

The lifetime allowance has now been replaced by the Lump sum Allowance  (LSA) and the Lump Sum and Death Benefit Allowance (LSDBA).

How to avoid paying tax on your pension

If you want to mitigate tax on your pension, the only certain way to do it is to ensure that your total taxable non-savings income, including your pension income, is below the personal allowance. However, this will likely not permit you your desired standard of living in your retirement years.

Instead, there are a few tips and tricks for limiting the amount of tax you are liable to pay on your pension. These are outlined below:

Only withdraw the amount you need each tax year

Of course, you should take out as much as you need to live a comfortable life, but you might want to keep an eye on staying within certain tax thresholds. For example, if you are careful to take out no more than £50,270 in the current tax year, including any other income sources, you will only need to pay 20% income tax. However, if you were to take out £50,271 or more, you’d pay 40% on the amount over £50,270, up to the next tax threshold. 

Note that at retirement stage, you aren't required to draw down on your pension income to put into savings. This means it can be more financially beneficial to withdraw less, or none, and stay within a low tax range, rather than withdraw more and have to pay substantially more tax.

Take advantage of a drawdown scheme

Drawdown allows you to vary your income from year to year, meaning you can opt to keep it below a certain tax range in a given year. This is not possible for you, however, if you have an annuity, since annuity income cannot be varied at will. Bear in mind that drawdown does come with some risks, so always check with a financial advisor before you pursue it as an option.

Don’t draw your pension in one go

As is evident from the points above, staggering your pension so that you receive less on an annual basis ultimately means you will pay less tax. While you might be tempted to empty your pension pots in one go, it will mean paying income tax on that amount in one year. In most cases, this would be a poor decision from a tax perspective as it may result in your income falling into the higher tax rate bands and triggering a significantly larger tax bill.

Phasing your 25% tax free cash 

In the event that you need to draw more than £50,270 from your pension, you would be liable for 40% income tax on any further income until the next tax band or if you go over £100,000 and hit the 60% tax trap. It is possible, in this instance, to take smaller amounts from your tax-free cash to top up your income when you reach these limits. When planned with care, this can be an excellent retirement income strategy to ensure you do not pay higher rates of income tax.

The importance of Pension Freedoms

With the introduction of Pension Freedoms in 2015, this allows far more flexibility for an individual when they come to draw their pensions.  An individual can now draw their pension from minimum pension age onwards, when and if they like, in any portion that they like. As well as this flexibility allowing an individual to tailor their income needs around their chosen lifestyle, it also allows far more flexibility with regards to tax planning, including income tax, as well as inheritance tax, which are all intertwined when planning in this nature. It is therefore important that your pension schemes have adopted the Pension Freedoms to ensure that you have absolute flexibility both on drawing an income as well as on death. It is important to note that not all pension schemes have adopted modern flexibilities. If you are unsure, get in touch.

So, the only way to truly avoid paying tax on your pension is to ensure your pension withdrawals (including your state pensions) do not exceed £12,570 per year.

Ways to reduce tax on your pension however include:

• Not withdrawing more than you need from your pension each year.
• Utilising a drawdown scheme so that you can vary your yearly pension income.
• Avoid drawing large pensions in one go.
• Phasing tax free cash.

How can we help?

The Private Office offers expert advice on how best to manage your pension, including how to avoid paying unnecessary extra tax. Get in touch to arrange a free consultation.

Arrange your free initial consultation

This article is intended for general information only, it does not constitute individual advice and should not be used to inform financial decisions.

A pension is a long term investment, the value of investments can fall as well as rise. You may not get back what you invest. Your eventual income may depend on the size of the fund at retirement, future interest rates and tax legislation. 

The Financial Conduct Authority (FCA) does not regulate estate planning or tax advice.

The UK job market remains under pressure, with hiring slowing and businesses bracing for rising costs. Recent surveys from KPMG and the Recruitment and Employment Confederation (REC) show a continued decline in permanent and temporary job placements as firms cut back amid economic uncertainty.

The October 2024 Budget introduced major tax hikes, including a rise in employers' National Insurance contributions from April 2025, adding further strain on businesses. With the Spring Statement approaching, concerns are growing over how upcoming tax changes will impact jobs and wages in the months ahead. All this together creates an uncertain job market where redundancies can become a very real possibility.  

Arrange your free initial consultation

When faced with significant life changes like redundancy and the subsequent options of finding a new job or retiring early, it can be challenging and bewildering to figure out the best course of action. If you encounter redundancy, what factors should you take into account when considering your pension? 

What happens to my pension if I am made redundant?

If you are thinking about what redundancy means for your pension savings, the good news is that any pension you have built up is still yours, and you do not lose any part of it due to your change in circumstances. However, any contributions made by your employer into your pension will stop. Whether you can continue making personal contributions will depend on the type of Pension you have – which we will explore later.

In addition to your workplace pension, you might have been building up your State Pension or accumulating other pensions, like a Self-Invested Personal Pension (SIPP), which are not impacted by redundancy. However, it is important to note that if you experience a work hiatus due to redundancy, your State Pension credits will cease until you resume employment or start receiving eligible benefits, like Job Seekers Allowance.

What type of pension do you have?

The type of pension you have will largely determine what options you have post-redundancy. In the UK there are two pension scheme types: 

1. Defined Benefit (DB) - also known as a final salary pension.
   A DB pension is an occupational pension scheme that provides a promise of income for life at retirement, sponsored by the employer, and typically determined by the number of years you have been employed by the company.
2. Defined Contribution (DC) – also known as a money purchase pension.
   A DC pension can be either an occupational pension scheme provided by an employer or an individual scheme funded by the member (and can also be added to by the employer). With this type of arrangement, benefits at retirement will be dependent on the level of contributions made by the member (and employer) and investment returns on those contributions.

What are the options for your pension after redundancy?

When faced with redundancy, your pension remains protected, but your options depend on the type of pension scheme you have. Here’s a simplified breakdown of your choices: 

Option 1: Leave your pension where it is 

Defined Contribution (DC) Pension: If you have a DC pension, you can leave it with your current provider, and it will continue to be managed until you decide to take your benefits, typically from age 55 (57 from 2028).

• The value of your pension pot will rise or fall based on the performance of your investments.
• You might also be able to continue contributing to this pension, but you’ll need to confirm this with your new employer or pension provider.

Defined Benefit (DB) Pension: With a DB pension, you can leave your pension in the scheme, where it will remain until you reach the retirement age specified by your scheme (usually around 65 or 67). You will still receive the benefits promised to you, based on your salary and years of service.

• You can also take early retirement if the scheme allows, but your pension will be reduced since it will need to last for a longer period. 

Option 2: Transfer your pension to a new provider 

If you prefer to consolidate your pensions, you can transfer your pension pot to a new provider. You may do this with a DC pension, but it’s important to understand the potential pros and cons of transferring, especially with DB pensions, as this might mean giving up valuable benefits.  

• DC Pension: You can transfer the value of your pension to a new provider, which might be your new employer’s pension scheme or another personal pension.
• DB Pension: Transferring a DB pension is more complicated. If you are considering this, you should seek professional advice to ensure that you do not lose valuable pension benefits. 

How can you access your pension?

Based on current legislation, you are only able to access your pension from the minimum pension age of 55 (increasing to 57 in 2028), there are very few exceptions to this rule, and redundancy does not fall into that category.

Whilst this is the general rule, typically, DB schemes will have a scheme specific age which will be the minimum age that you can access your pension benefits without penalty.

Can you put redundancy money into a pension?

In short, yes you can, and it can be quite tax efficient to do so as any redundancy payment over £30,000 is taxable as income. Statutory redundancy pay does not include things such as holiday pay, unpaid wages or payment in lieu of notice which would be taxed as normal employment income.  

Should you wish to contribute into your pension using your redundancy payment, you should also be aware that there is a maximum amount that you can contribute each year tax efficiently. This is the lower of the following:

• The annual allowance less any employer or employee contributions (or DB funding) already made in the tax year, for the current tax year (2025/26) is £60,000. If you have not used all your Annual Allowance in the previous three years, then you may be able to carry forward any unused allowance to be utilised in the current year, allowing more than £60,000 to be contributed.
• Your relevant earnings for the year or £3,600 (£2,880 net) - whichever is higher. Only the portion of a redundancy payment above £30,000, which is taxable as income, counts as relevant UK earnings for pension contribution purposes. The tax-free £30,000 portion does not qualify as relevant earnings and cannot be used to justify pension contributions beyond the basic £3,600 limit if you have no other earnings 

There are two ways of doing this:

1. You can use part of your redundancy payment to make a pension contribution.
2. Or, should your employer agree, you could give up some of your redundancy payment as an employer contribution known as a ‘redundancy sacrifice’. 

Example: Redundancy sacrifice pension

Samantha has earned £60,000 in this tax year and has been made redundant. She has accepted a redundancy package of £35,000 and wants to consider her options in terms of pension contributions.

As the first £30,000 of her redundancy payment is paid tax-free there would be no additional benefit for her employer to make this pension contribution on her behalf, as she would not receive tax relief from an employer pension contribution.

The surplus above the first £30,000, i.e. £5,000 would be subject to income tax however, at her marginal rate. Therefore, should her employer agree to sacrifice this into her pension, there would be no tax due, giving her a tax saving of £2,000 as she is a higher rate taxpayer.

It is important for Samantha to also consider any other pension contributions she has made in the tax year to ensure she does not over-contribute and have an annual allowance charge. If Samantha is unsure, she should seek the advice of a financial adviser who could guide her.

How can we help?

If you have been made redundant, or are in the process of being made redundant and you are unsure of what course of action to take with your pension, get in touch with one of our advisers who will be happy to help. We’re currently offering anyone with £100,000 or more in pensions, savings and investments a free retirement review worth £500.

Arrange your free initial consultation

This article is intended for general information only, it does not constitute individual advice and should not be used to inform financial decisions. 

A pension is a long-term investment not normally accessible until age 55 (57 from April 2028 unless the plan has a protected pension age). The value of your investments (and any income from them) can go down as well as up which would have an impact on the level of pension benefits available.  Your pension income could also be affected by the interest rates at the time you take your benefits.

Levels, bases and reliefs from taxation may be subject to change