Changes to the public pension system and declining final wage schemes could mean widowed spouses could face a “major income shock,” LCP warned.

Analysis by consultancy firm LCP, released over the weekend (August 7), found that grieving spouses who retired with the new state pension could see their finances drop significantly compared to those who took retired and have been bereaved in the past.

The company warned that under the old system, a woman’s standard of living fell by about 9 percent when her husband died, but under the new system, her standard of living fell by about 24 percent. percent.

He said that before the introduction of the new state pension in 2016, the state pension system consisted of “derivative” pension entitlements where women could get pensions based on contributions. a husband, ex-husband or late husband.

However, under the new rules, when a husband dies, his wife will usually inherit little or nothing of his state pension.

This means that her standard of living could drop much more when her husband dies than under the old rules where her state pension as a widow would be increased, explained Steve Webb, partner at LCP.

The same argument could be made to some extent for surviving husbands. However, due to gender pension inequality, a surviving husband is likely to retain a higher proportion of the couple’s total income in retirement than a surviving wife.

Second, people got defined benefit pensions which provided generous widow’s pensions upon the death of the husband.

But now people have defined contribution plans and although a widow can inherit any balance in the pot when her husband dies, if he later dies in retirement, the pot may have been reduced to a low level. .

LCP and its advisers have joined forces to urge recently retired couples and those nearing retirement to check their situation and make sure they are better prepared.

Webb said: “Dealing with grief is hard enough, but dealing with a sharp drop in living standards afterwards is even more difficult. Although the new state pension generally pays more fully retired women than the old system, it has very limited provisions for widows and widowers.

“Newly retired couples and those arriving at retirement need to know where they would be with public and private pensions if one of them were to die and consider making additional arrangements to cushion the financial impact of bereavement. “

Darren Cooke, a certified financial planner with Red Circle Financial Planning, said, “This is one of those situations where a warning notice is given. Just being aware of the change in income if one partner dies allows the couple to plan for it and think about how the widower or widower might cope.

“In early retirement, the couple should be careful not to go into debt, as even small interest payments could be a big part of reduced income. Also be careful not to spend your savings too quickly, as they can be better used to support the survivor once income declines.