Thousands of married women who reached State Pension age before 6 April 2016 have been short-changed their State Pensions due to government errors and are set to receive £3 billion over the next six years, according to a report.
The Office for Budget Responsibility’s ‘Economic and Fiscal Outlook’, published on 3 March 2021 alongside the Budget, said that the Department for Work and Pensions has identified underpayments of state pension relating to entitlements for certain married people, widows and over-80s. Some State Pension underpayments date back as far as 1992.
The report says: “Our forecast reflects an initial estimate that it will cost around £3 billion over the six years to 2025-26 to address these underpayments, with costs peaking at £700 million in 2021-22.”
Some of those who are entitled to a higher State Pension weren’t aware that they could claim extra when their husband reached the age of 65. There are also many women who haven’t received the money they’re entitled to because government computers failed to award them the correct amount.
Here, we explain who might be entitled to a higher State Pension, how to find out if you or someone you know is affected, and where to go to claim back any money you’re owed.
If you’re thinking about getting professional financial advice, you can find a local financial adviser on VouchedFor or Unbiased.
Alternatively, if you’re looking for somewhere to start, we’ve partnered with independent advice firm Fidelius to offer Rest Less members a free initial consultation with a qualified financial advisor. There’s no obligation, however if the adviser feels you’d benefit from paid financial advice, they’ll talk you through how that works and the charges involved.
Fidelius are rated 4.7 out of 5 from over 1,500 reviews on VouchedFor, the review site for financial advisors.
Why are some women getting a lower State Pension than they should?
When the National Insurance system was expanded back in the early 1940s, it was assumed that men would typically be the main breadwinners, and their wives would be financially dependent on them. As a result, married women were permitted to pay lower National Insurance Contributions (NICs) than single women, known as the ‘married woman’s stamp’.
Once their husbands reached State Pension age, these women would receive a pension that was calculated based on their husbands’ National Insurance Contributions, rather than their own. So that if, for example, the husband had a full record of National Insurance contributions, his wife would receive a pension equivalent to 60% of the full basic State Pension.
The ability to claim a pension based on the National Insurance record of a spouse largely stopped for those who reached State Pension age on or after 6 April 2016 – the date when the new State Pension was introduced. In 2020/21, the full basic State Pension is £134.25 per week (£141.85 in the 2022/23 tax year), which makes the rate for married women who reached State Pension age prior to 6 April 2016 £80.55 a week (60% of £134.25).
Why have some married women not received 60% of their husbands’ State Pensions?
Some women simply didn’t know that they were entitled to claim up to 60% of the basic State Pension and therefore may have been receiving less than they’re entitled to. Women with husbands who reached State Pension age before 17 March 2008 had to claim any pension uplift themselves so many did not claim simply because they were not aware of their entitlement.
Those whose husbands reached State Pension age after 17 March 2008 should have received the 60% amount automatically if they qualified, however in some cases, Department for Work and Pensions (DWP) computers have failed to pay it, resulting in many missing out.
Women who needed to make a claim (because their husbands reached State Pension age before 17 March 2008) can do so now but can only backdate their claim for 12 months. Those who should have received the uplift automatically (because their husbands reached State Pension age after 17 March 2008) can backdate their claim to the date they qualified, or the date that the computer should have automatically started making the higher payments if later.
How many people are affected?
It’s thought that tens of thousands of women born before 6 April 1953 could currently be receiving a smaller State Pension than they’re entitled to. Sir Steve Webb, former Pensions Minister and now a partner at consultancy Lane Clark and Peacock, who first highlighted the issue last year, said that “huge numbers” could be affected, and described the £3 billion allocated to resolve the issue as “mind-numbing”.
“When I first looked into this issue a year ago I had no idea it would explode into such a huge issue,” he said: “Repayments of £3 billion over the next five years could imply huge numbers of women have been shortchanged, potentially for a decade or more. The government needs to devote serious resources to getting these repayments out quickly as these women have waited long enough”.
How do I work out if I or someone I know has been underpaid?
If you are a married woman who reached State Pension age before 6 April 2016, your husband is receiving the full State Pension age and your Pension is less than 60% of the amount he receives, then you may be receiving less than you’re entitled to.
LCP has set up a useful calculator to help married women identify if they have been underpaid. You need to enter a few basic details, such as you and your husband’s ages and how much State Pension you each currently receive, and the calculator will let you know if you might be getting less than you’re entitled to. The calculator doesn’t apply to British people living in countries outside the UK, such as Australia where UK state pensions are frozen and don’t rise each year.
You shouldn’t have been underpaid your State Pension if you fall into one of the following categories:
- You’re a married woman whose husband has not yet reached state pension age.
- You’re a single woman who’s never married;
- You’re a married woman but your husband was not entitled to a full basic state pension.
How do I make a claim if I’m eligible and not getting 60% of my husband’s State Pension?
If you’re not getting 60% of your husband’s State Pension, you’ll need to get in touch with the Pension Service and tell them you think that your pension should be increased. Ask if you’re owed any back payments and if you are, request that these are paid to you with interest added. You can contact the Pensions Service by telephone on 0800 731 0469 or find out more here.
When you call you will need to have your National Insurance number to hand and you’ll be asked various security questions to prove your identity.
Can I still claim if I’m divorced?
Divorced women should, in theory, be able to ‘substitute’ the NI record of their ex-husband for the period while they were married. If you’ve been married and divorced more than once, the record of your ‘most recent’ ex-husband will apply.
More information for divorced women can be found on the Pensions Advice Service website here.
What if I’ve been widowed?
Widows on low state pensions should be able to claim on their late husband’s record. If, for example. your husband was able to claim the full basic state pension, then you should have started receiving this amount automatically after he died.
If you’re on a low basic weekly pension and didn’t start receiving higher pension payments when your husband died, contact the Pensions Service and ask it to investigate. You should be entitled to claim backdated higher payments from the date your husband passed away.
More information on the rules for widows can be found here. You can find out more about the State Pension in our article How the State Pension works.
If you’re thinking about getting professional financial advice, you can find a local financial adviser on VouchedFor or Unbiased.
Alternatively, if you’re looking for somewhere to start, we’ve partnered with independent advice firm Fidelius to offer Rest Less members a free initial consultation with a qualified financial advisor. There’s no obligation, however if the adviser feels you’d benefit from paid financial advice, they’ll talk you through how that works and the charges involved.
Fidelius are rated 4.7 out of 5 from over 1,500 reviews on VouchedFor, the review site for financial advisors.