In some plans, when looking at the Let's See Cash Flow chart you may notice an unexpectedly large increase in the state pension at the first mortality event:
For a widow's pension, the software uses the greater of the widow's state pension, as input in the State Pension screen, or the widow's contributory pension, which is coded behind the scenes.
Widow's state pension
The inheritance of the state pension is set in the State Pension screen in the Widow, Widower, or Surviving Civil Partner Pension section. The default is 0%, but you can amend this by typing in the relevant figure:
By default both the state pension and the widow's state pension will escalate by the Income % rate set in Plan Preferences > Default Inflation/Growth Rates:
You can over-ride this at the state pension level in the State Pension screen in Advanced Settings > Growth by typing your preferred figure:
Widow's contributory pension
The starting value of the widows contributory pension is hard coded to be the figure in current legislation and this is then escalated each year using the Income % preference in Plan Preferences, as shown above.
You can amend this preference, if required, however, note that this would also affect the default growth rate on earned income, other income e.g. rent and the state pension.
By default, the software will assume that the clients are entitled to the widows contributory pension.
However, if you would prefer to assume that they are not entitled to it, and use the widow's state pension entitlement instead, you can amend this in the People screen.
Select the primary client in the box top-right and in the Auxiliary details section set 'is this person a qualifying contributor to a Widow's pension' to 'No'. Repeat for their spouse/partner.
Once the widow's contributory pension is turned off, the widow's state pension will be used instead and the large increase in state pension on first death should no longer show in the Let's See Cash Flow chart.