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Here at Suttons IFA, our financial planners are regularly talking to people in Manchester about how to get a better pension deal. One area where women, in particular, may be missing out is with regards to the state pension. In short, those who reached state retirement age before April 2016 could be missing out on hundreds, if not thousands of pounds.
The number of women affected is likely to be in the hundreds of thousands. Given that at least 15m people in the UK have no retirement savings at all (and so will likely rely on state pension income), this is significant. Below, our Manchester financial planning team outlines how women are affected by this nuance in the state pension, and what some of your options might be.
The women missing out
To understand why some women are not getting as much state pension as they should, we’ll need to briefly recap how the system got here. The state pension was set up after WWII and it primarily went to men, who were the breadwinners in most British households. Women would gain a proportion of their husband’s state pension, and this system broadly stayed the same until April 2016 when important reforms were introduced.
From the 6th of April 2016, the new state pension was implemented. Those who reached their state pension age before this could, as a form of compensation, receive an increased income from the state pension. Yet this didn’t happen for many women for a few reasons:
- A government computer error. This led to some women not receiving the automatic increase in payments. This should have happened if their husband retired after 16 March 2008. Here, you can check your documents to see whether this happened to you – or you can approach a financial adviser to assist you.
- A lack of awareness. Married women were supposed to claim 60% of the state pension their husband was entitled to, but simply did not know that this was their responsibility.
Determining if you’re affected
If you’re currently retired, then to find out if you’re affected it’s a good idea to start by looking at your annual pension statements. Here, you’ll need to pay close attention to where it shows your basic state pension. Be careful not to simply look at the total pension received, since this might include other pension income (e.g. pension credit).
A good starting point is to check whether you’re getting at least £80.45 per week, assuming your husband retired on/after the 17 of March 2008. If you’re receiving less than this then you likely were affected by the government error. Another idea is to check whether your weekly basic pension is under 60% of your husband’s. If so, then you could be due extra payments.
Other options to check if you’ve been impacted include using a reputable pension calculator or seek financial advice to check whether you’re entitled to more. This is some of the key information you’ll need:
- Your age and your husband’s age.
- When you both reached your state pension age.
- How much basic state pension you both receive.
Please note that women in same-sex marriages or civil partnerships are not affected by this.
What should have happened?
The intended (but failed) outcome with your basic state pension depends largely on the date your husband reached his state pension age:
- Scenario 1: your husband reached this age on/after the 17 of March 2008. If this is your situation, then an automatic “top up” of your pension (matching 60% of your husband’s) should have happened. If not, then you can immediately apply to start receiving the right amount going forwards. You can also claim backdated payments up to the date when you should have started getting the extra pension income.
- Scenario 1: husband retires after the 17th of March 2008. In this case, the Department for Work and Pensions (DWP) was not obliged to automatically increase your pension income. It needed to be claimed. If you’re in this position, then you can claim the correct amount up to the last 12 months. You can also apply for the correct rate going forwards.
If your husband is deceased
Things are a little more complicated if your husband has died. However, there could still be some options open to you. If he had more qualifying years of national insurance contributions (NICs) compared to you, then assuming you both reached state pension age before April 2016, you should have received a basic pension based on his record – not your own. If this did not occur, then you can apply for a boosted back payment from the Pension Service.
Conclusion
It’s testimony to the complexity of the UK’s current pension system that this information about women missing out on payments only recently came to light. Indeed, the total amount owed to married women across the UK could amount to £100m. If you are in Manchester or Cheshire and believe you may be affected, then our financial planning team here at Suttons IFA is here to assist and help you get the best deal.
