State Pension  

The little known rule that could help 10,000 women

The little known rule that could help 10,000 women

Women close to retirement age are being urged to check their past national insurance contributions as they could benefit from a little-known uplift to their state pension, according to Royal London.

Under the new state pension rules introduced in 2016, there is a concession for women who paid the ‘married woman’s stamp’ to make a claim based on her husband’s national insurance record.

The rate payable would be the full basic state pension of £129.20 per week if they are now divorced or widowed, or 60 per cent - £77.45 per week - if they are married. 

The mutual insurer stated that government estimates showed around 10,000 women could potentially benefit from this concession.

When the modern welfare state was designed in the 1940s, the government’s assumption was that men would be the main breadwinner, whilst married women’s primary role was to raise children. 

Married women who worked were allowed to opt to pay a reduced rate of national insurance contributions - the married woman’s stamp.

These women would not build up a state pension in their own right but could claim a partial state pension based on the national insurance record of their husband when he retired.

The number of women paying the reduced stamp peaked in 1977/78 at around 4.4m. From the following year onwards no more women were allowed to opt into the scheme, but those who were already paying the reduced rate were allowed to continue to do so. 

This entitlement has continued to this day and only lapses if a woman does not pay contributions for a period of two full years.

In response to a freedom of information request submitted by Royal London, HM Revenue & Customs stated there were still some 200 women in the UK paying the reduced rate.

In principle, there could still be some women left in this situation until 2028, the taxman added.

Due to the new state pension system introduced in 2016 – which is based on an individual’s own record of NI contributions – the government introduced the concession being flagged by Royal London.

Sir Steve Webb, former pensions minister and director of policy at Royal London, said: “It is not widely known that women who paid the reduced stamp at any point in the 35 years before they retired, and who come under the new state pension system, can claim a minimum payment under the new system. 

“If any woman is getting a substantially reduced amount from the new state pension she should check if she paid the reduced stamp and contact the Pension Service if she is in any doubt.”

Mike Lacey, partner at Berkshire-based financial adviser firm Bowman Pension Consulting, welcomed Royal London’s warning, even if “does serve to highlight the complexity of the state pension landscape”.

He said: “If government thinks up to 10,000 women could benefit, it should be publicised widely.

“I don’t know enough about the ability of government to data mine the national insurance records to see if they can be proactive here, but I would like think it would not be impossible.”