New State Pension

The Government says women will be the big winners from the new state pension – called the ‘single tier’ pension – expected to be around £144 a week. But many women claim it will leave them worse off.

The new pension begins in April 2016. Women who were born before 6 April 1953 will come under the present rules. And many believe they are being discriminated against because men of the same age will get the new pension. Another group born later will come under the new rules. But some will get less than they would under the present scheme.

Too old
When the new scheme begins on 6 April 2016 only those who reach pension age on or after that date will come under the new rules. For men the calculation is easy. Their pension age will still be 65 so if they are born on 6 April 1951 or later they will get the new single tier pension.

For women the calculation is more complex. Women’s state pension age is rising – currently it is 61 years and 7 to 8 months. By April 2016 women’s pension age will be around 63. Women born 6 March 1953 to 5 April 1953 will reach state pension age on 6 March 2016 so will not come under the new system. Women born on 6 April 1953 or later will reach pension age on 6 July 2016 or later and will get the new single tier pension.

This means that women born 6 April 1951 to 5 April 1953 will not get the new pension whereas men born in that period will. About 700,000 women are in that group and many of them they feel very aggrieved.  Most of them would have done better under the new pension. If they get the full basic pension of £107.45 (all figures are in 2012/13 terms and do not reflect the rises in April 2013) they would get over £36 a week more from the single tier pension of around £144 a week.

The Government says that on average the difference is a lot less, about £6 a week. The average pension paid to this group would be around £125 a week under the old system taking into account additional earnings related pension they may be due. It also says that the new pension they will get is more like £131 a week not the full £144 because many of them do not have a full contribution record. Although the average difference may be £6 a week, many women will undoubtedly get far less under the current system than they would under the new one.

Although these women get their pension earlier than a man – between 61 and 63 whereas he has to wait until he is 65 – campaigners say many women could be £35,000 worse off over their lifetimes by being denied the new pension. The government says nine out of ten women will get more from the pension they draw during those extra years than the loss from the lower weekly pension under the old rules. That still leaves 70,000 worse off.

Too young
Some women who will get the new single tier pension because they were born on 6 April 1953 are also angry. They will miss out on rights to a pension based on their husband’s contributions.

Under the present pension scheme a married woman can be entitled to a basic state pension based on her husband’s contributions. Formally known as ‘Category B’ pensions, these married woman’s pensions are about 60% of the full pension – £64.40 in 2012/13. If the woman has earned a pension from her own full National Insurance contributions she will get whichever is the higher – a pension on her own contributions or a Category B pension on her husband’s. In addition a widow or divorced woman can get a full pension on her late or ex husband’s contributions if she has not remarried before pension age. A woman born before 6 April 1953 will be able to claim a wife’s or widow’s pension on her husband’s contributions even if his date of birth puts him in the new scheme.

Under the new single tier pension scheme wives’ and widows’ pensions will not be paid to any woman who was born on 6 April 1953 or later. Some women who have not worked very much or paid many – or indeed any – full rate National Insurance contributions will not get a pension of their own and neither will they get a pension as a wife or widow. Others with some contributions of their own may get a small pension of their own on these contributions. But it may be far less than the wife’s or widow’s pension they could have got if they had reached pension age under the current scheme.

Married men and civil partners have similar rights to married women under the present scheme. But they will have no rights to benefit from their wife’s or partner’s contributions if they come under the single tier pension.

However, all spouses and civil partners may have some rights to inherit all or part of their spouse’s or partner’s additional pension such as SERPS. Those rights can carry forward into the new scheme under transitional arrangements.

Married woman’s stamp
There is one exception to the general rule that married woman’s pensions will not be paid to women born 6 April 1953 or later. A woman who paid reduced rate married woman’s National Insurance contributions will keep some rights to a wife’s or widow’s pension. To qualify she must have had the right to pay the reduced contributions at some point within the 35 years before she reaches pension age. Complex transitional rules will ensure these women are given a ‘safeguard’ amount equal to the £64.40 married woman’s pension or £107.45 for a widow or divorcee as part of the calculation of their entitlement under the new scheme.

Check your NI record
Three groups of women who come under either scheme should check their National Insurance record carefully. Women who brought up children should have had credits given to them in 2010 for each week they claimed child benefit and previously got Home Responsibilities Protection. If at any point they had the right to pay the reduced rate married woman’s contributions these credits would only start after two whole tax years out of the labour market. But they may not have been applied correctly.

Some women may have spent time caring for another person. They could have got credits for those years if they spent at least 35 hours a week caring and the disabled person got certain benefits. If they did not get those credits they can still be claimed for years between April 1978 and 2002 and after April 2010. They cannot be claimed for years between April 2002 and April 2010.

Foster parents can get credits based on Home Responsibilities Protection for years from 2003. Most will have had them applied in 2010. If not they can still apply for them.

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