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Aug 18

Women Miss Out on State Pension – Could You Be Owed Thousands?

Reading Time: 5 mins

It was recently revealed that hundreds of older women could miss out on State Pension payments owed to them. Could you be one of the women who’s missed out on receiving your full State Pension entitlement? A report issued by Sir Steve Webb, former Pensions Minister, estimates that approximately £100 million is owed to retired women. Caused by a Government error, thousands of women have been left shortchanged, and owed money for not having their pensions uplifted.

why have some women missed out?

Thousands of women miss out on State Pension payments due to error

National Insurance and the State Pension were originally set up in a post-WW2 climate. Generally speaking, men were the primary earners and women spent more time at home, and out of formal employment. As these couples neared retirement age, many wives didn’t have enough qualifying years of National Insurance. They weren’t entitled to the full State Pension themselves, but instead were allowed to uplift their pension to 60% of their husband’s basic rate when he also retired.

The problem is, many women weren’t made aware of this entitlement, or didn’t even know to expect it. They don’t even know that they could miss out on State Pension payments they’ve been owed for years! Since 17th March 2008, this uplift should have been done automatically. However, a glitch in the DWP’s (Department for Work and Pensions) system meant that many women missed out. Prior to March 2008 though, women needed to claim this uplift themselves.

Before the system changed over to be automatic in 2008, the DWP notified women about this entitlement ahead of reaching retirement age. It was included amongst all their other pension details in an information pack. However, if at the time their husband was still a few years away from retiring, the notice may have easily been overlooked. Then, before the husband retired he was also sent an information pack which gave notice about the potential to have the wife’s pension uplifted. Though no communication was sent directly to the wives to remind them of this. This poor communication meant many women fell through the cracks and have been receiving underpaid pensions for years.

who does it affect?

This only applies to women who reached state pension age before 6th April 2016, when the pension system was changed. The issue is generally affecting women who, for whatever reason, didn’t make enough National Insurance contributions to qualify for their own full State Pension. However, if their husbands did qualify, the wives were entitled to have their basic pension increased to 60% of their husband’s, when he retired.

you could be due a top up

The DWP has now handed over hundreds of thousands to women who miss out on State Pension. Some people have received decades worth of backdated payments.

You meet the main criteria if:

  • You’re a woman and are, or have been, married to a man. Unfortunately same-sex marriages are not included.
  • You reached State Pension age before 6th April 2016.
  • Your basic weekly pension is less than 60% of your husband’s basic weekly pension.

Widows and divorcee’s may also be entitled, find out more here.

When your husband actually reached retirement age will affect how much you can backdate payments. You see, if your husband retired before 17th March 2008, then you’ll only receive 12 months of payments. This is because before March 2008 women had to claim the uplift themselves. Steve Webb is trying to appeal this limit, though, so claimants might be entitled to more in the future. But the system changed in March 2008, and it became down to the government to automatically uplift the pensions. The fact that in many cases they failed to do so is the government’s error, and the women are entitled to all the money they’ve missed out on.

how this affects widows and divorcees

If you’re divorced, you can’t share a State Pension. But divorced couples can use their former partner’s National Insurance contributions to increase their State Pension. This doesn’t affect what the other person receives either.

If you’re widowed and don’t get a full State Pension yourself, then you can apply for your deceased partner’s National Insurance record to be used instead of your own. You need to have reached State Pension age before April 2016 to have your pension based on their contributions though.

check if you’re eligible to claim

Don't miss out on State Pension uplifts - claim online

So far, average back payments for each case have been around the £9,000 mark – not to be sniffed at! Thousands of women are discovering it’s affected them. Plus, the government has announced that it refuses to seek out women entitled, so you need to do it yourselves.

LCP have created an online tool where you can check whether you qualify. To get started you’ll need some basic information, including ages, the year you hit state pension age, and how much you currently receive. This needs to be the basic amount – the total pension you receive may be higher.

If you don’t have this information you can both contact the Pension Service and ask for it.

If your husband retired before 17th March 2008, you’ll want to find out if you’re eligible and if you are, claim as soon as possible. At the moment these payments are only getting backdated 12 months. But the sooner you get in touch, the quicker your current pension will be updated and you’ll be paid the right amount going forward. If your husband retired after this date, then there’s less urgency as all incorrect payments will be backdated.

Refunds are taxed, but as if they were paid out as part of your State Pension like they should’ve been. For most women this’ll mean not having to pay tax on their refund at all.

example: how much could you be entitled to?

Current pension rates mean that a husband on full basic state pension receives £134.25 a week. His wife, entitled to a 60% equivalent of that, is then eligible to receive £80.45 per week. But thousands of women miss out on State Pension changes – so they’re getting much less.

Therefore, say you had been receiving 40% of a basic state pension at £53.70 a week, for 5 years. You’ve been underpaid by £26.85 a week, for 260 weeks. That’s a total of £6,981 in underpaid state pension!

how to claim

To claim, or check whether you’re eligible, you need to get in touch with the Pension Service. They’ll be able to check you claim, and offer you guidance on how to proceed.

be wary of scams

Unfortunately, almost any financial situation brings with it people who will try to make money out of it. The government has formally announced that they won’t be reaching out to individuals, so be cautious and don’t give out any banking or card details to someone who has reached out to you. If you can claim, make sure you do it through the government site and with registered authorities.

useful resources

  • LCP Report – The first paper by LCP which explores the issue in greater detail.
  • LCP Calculator – An online tool created by LCP, allowing you to enter your details and find out whether you could make a claim.
  • Pension Service – Find out about your State Pension eligibility, claims, and payments. If you’re unsure whether you are entitled to backdated payments, contact the Pension Service and they’ll be able to help.
  • Parliamentary Ombudsman – The Ombudsman investigate complaints from people who believe they’ve suffered an injustice because government bodies have not acted or responded correctly.
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