Money Down the Drain

What would you call a social security system that demanded you pay up to £19 a week but gave you no pension and no rights to any other benefits? The short answer is ‘Ours’. Millions of married women have paid billions of pounds into the National Insurance scheme and are only now realising that they will get nothing out of it at all.

Like many women Marian [Marian correct] Barker returned to work when her youngest child reached five. That was 1972 and she worked at the Southend branch of C&A until she reached 60 in 1999 and, like millions of married women, she paid the special married woman’s rate of National Insurance contributions.

"For all that work and all those contributions I get just 18p a week. The government says we were well informed about the choices but we didn’t have any proper information. We have worked all our lives and paid thousands of pounds but now we get nothing."

When it comes to National Insurance many married women are definitely second class citizens. Most people in work pay full National Insurance contributions and they earn rights to a state retirement pension, to the new State Second Pension (which replaced SERPS last April), to incapacity benefit if they are unable to work due to illness or disability, and to jobseeker's allowance if they are unemployed and looking for work. In addition, if they are married and die before their spouse, their widow or widower will get bereavement benefits which can include a £2000 lump-sum and a weekly allowance for a year – or longer if there are dependent children. But over the years millions of married women have been persuaded to pay a reduced ‘married woman’s’ rate of National Insurance contributions and they earn precisely nothing for them. These women get no rights to any of these pensions or benefits. It is money down the drain.

Despite the fact they get nothing for them, married women’s contributions are not exactly cheap. This year the 100,000 women still paying them have to fork out 3.85% of their pay between £89 and £585 a week. The maximum they could pay is £19 a week, but even a married woman working full-time for the minimum wage of £4.10 an hour will have to pay £2.89 a week for nothing. From April it will cost even more when the contributions go up to 4.85%, raising the wasted contributions paid by a woman on average pay from £10.66 a week to £13.43.

The subject will not be new to regular readers of Saga Magazine. I wrote about the rights of married women as long ago as 1984 and in 1998 (Saga Magazine April 1998) I advised any married women still paying this iniquitous tax to stop wasting their money and convert to paying the full National Insurance contributions. Almost every one of the women still paying something for nothing would gain by doing so.

· First, she will start earning at once an entitlement to the State Second Pension which is paid on top of any other retirement pension she may get. And because of the way the State Second Pension works she will be guaranteed to get a pension of at least £1 a week for every year she pays full National Insurance contributions.

· Second, she could find she earns a small basic retirement pension of her own. These complex rules are explained in the box.

· Third, she will start earning rights to jobseeker's allowance and to incapacity benefit as well as earning the right for her husband to get bereavement benefit if she dies first.

Most married women already pay the full contributions. Anyone who started work since May 1977 has to pay full contributions and many others have converted to full contributions since then. In the mid 70s more than four million married women paid the reduced rate. Since then the number has steadily fallen, but 100,000 still do so and they will pay £25 million between them into the National Insurance fund this year. New figures, obtained by the Liberal Democrat MP Steve Webb, reveal that since 1975 married women have paid more than £8 billion in reduced contributions to the National Insurance fund, contributing to the £24 billion surplus it currently enjoys.

Many of the millions of women who have paid reduced contributions in the past have not yet reached 60 – and it is a great shock when they discover they have earned no basic state pension at all. The rules about married women’s pensions are so impenetrably complicated (see Box) that many married women continued to pay the reduced rate without understanding the consequences. Many say they were misled by government officials about the choice they were given. And now they want compensation.

Margaret Watts from Weymouth went back to work as a nurse in 1965 after her second child was born and paid the reduced ‘stamp’ as it was then called. "I can’t remember being given any information. I was just put on it. The DWP says I signed a form but I don’t remember that, it was just automatic. At one time my boss said I was lucky because I could carry on paying the lower contribution while some married women paid more. In the 1980s I asked the DHSS, as it was then, and they said ‘don’t worry you’ll get a pension from your husband’. I was told there was nothing I could do to enhance my pension so I carried on. I thought I would at least get the reduced pension at 60 but no – I have to wait until my husband John reaches 65 by which time I’ll be 62."

Mrs Watts has formed a pressure group called Support Women Against Pensions Poverty (SWAPP) which campaigns for a fair deal. In particular, she wants the Government to let married women buy the full contributions they could have paid in the past and get their own pension at 60. At the moment that is not normally allowed.

If you are affected by the unfair rules affecting married women, we would like to hear from you. We will pass the details on to SWAPP.

If you are under 60, you can get a forecast of the pension you will get by filling in form BR19 from the DWP. You can do this online at www.thepensionservice.gov.uk or contact your local social security office.

If you are working and want to change to full contributions then get leaflet CA13 from the Inland Revenue called National Insurance contributions for women with reduced elections www.inlandrevenue.gov.uk/leaflets/nic.htm

MARRIED WOMEN’S PENSIONS

A married woman can get a basic state retirement pension in two ways. First, she can earn it herself just like anyone else, by paying full National Insurance contributions at work. If she pays them for at least 39 years then she will get the full pension, currently £75.50 a week. If she pays them for less than 39 years she will get a lower pension, reduced by roughly £2 a week for each year she has missed. If she has paid for ten years she will get £19.63 a week – the smallest pension that can be paid. If she has paid contributions for nine years or less she will get nothing. Her pension is paid at the age of 60.

Second, she can get a pension on her husband’s contributions. This pension is only £45.20 a week – much less than the full pension of £75.50. And she cannot get it until her husband is 65 and draws his own pension. So it can be some years after she reaches 60 that she gets this married woman’s pension.

A woman who has paid some contributions of her own may well find she gets her own pension at 60, possibly quite a small one, and then when her husband reaches 65 she will become entitled to the pension on his contributions. At that point she gets whichever is the higher – not the two added together. So unless she paid enough full contributions to earn a retirement pension of more than £45.20 a week (around 24 years) the advantage of paying her own contributions is limited to the time when she is 60 but before her husband is 65.

A married woman can also get any graduated pension (1961-1975), SERPS (1978-2002), or State Second Pension (from 2002). These can be paid at 60 by themselves or can be added on top of any other pension she has on her own or her husband’s contributions.

November 2002

e-mail Paul Lewis on paul@paullewis.co.uk