This piece first appeared in The Daily Telegraph on 20 May 2000
The text here may not be identical to the published text
The Government has failed to warn hundreds of thousands of married women that they will get no pension when they reach 60 even though they have worked and paid National Insurance Contributions. These women have been paying the so-called reduced rate of National Insurance for more than twenty years. But now they are approaching pension age, many are saying they were not warned of the consequences of paying the ‘married woman’s stamp’.
Since October 5, 1989 these contributions have been fixed at 3.85% of earnings. For more than ten years, until changes to National Insurance in April 1999, the married woman’s contribution could be as much or more than the full contributions paid by other working people. In 1998/99, married women earning less than £83 a week paid MORE in National Insurance Contributions that if they had changed to full ones. That was because the 3.85% was applied from the first pound of earnings whereas people paying the full rate paid only 2% on the first band of income. Despite the high percentage, married women get nothing for their contributions. They are not entitled to unemployment benefit, sickness or disability benefit nor to a retirement pension when they reach 60.
The Daily Telegraph has warned about this problem five times since 1989 but nothing has been done by successive governments. Now we have discovered that some women were encouraged by officials to pay these wasted contributions and were never advised of the consequences. Anne Moir is one. Now aged 57 she went back to work more than 20 years ago in a part-time job for the local council.
"I went to the Department of Social Security and asked about paying a stamp, because I hadn’t worked for ten years. I was advised that because I worked part-time I would be better paying the reduced rate. I just thought it was the rate married women paid. No-one told me then the choices I had or that I would get nothing for those contributions. I only realised that in 1994 when I was ill with a heart complaint and discovered I was not entitled to any sickness benefit once my sick pay had run out."
Anne made a formal complaint about being misinformed. After five months consideration, the Department of Social Security simply said that it was her fault for asking the wrong question rather than theirs for giving the wrong information.
"Both the enquiry and the response were oral and no record of either was kept. In many cases apparent misdirection is a result of the question asked not really reflecting the enquirer’s full intentions. The reply given may have therefore have been correct in relation to the question posed but not in the context of the contributor’s actual position."
The Department of Social Security did admit however that there were up to 400,000 women who were paying the married woman’s rate of contribution but would pay less and get more if they changed to the full rate. Unfortunately they did not tell them.
"I think I should be compensated. I would have got sickness benefit when I had my heart trouble and then I was ill again later. I got no help then. And now I will get no pension. Why did they let me pay for all those years knowing that?"
Her view is supported by Amanda Davidson, a director of independent financial advisers Holden Meehan.
"It beggars belief that a person can go more than 20 years paying substantial sums and get nothing. If she had put it in a savings plan she would at least have some money. It is robbery. Who would pay almost 4% of their salary away when they got nothing back? Any organisation other than the Government would be forced to pay compensation. They should return all her money with interest - that’s the least they should do and it is similar to the compensation we would have to offer if we gave wrong advice."
Although she was low-paid, Mrs Moir has paid more than £3000 in wasted contributions over the years she worked. If she had paid the full rate it would have cost her no more but she would have been earning a pension for when she was 60. At the moment, contributions paid early in her life will give her a small pension of around £17 a week. But if she had paid full contributions from the time she began work in the late 1970s, her pension would be more than £50 a week.
Anne’s case came to light when Steve Webb the MP for Northavon and the Liberal democrat shadow social security secretary raised the issue recently. He says the case for compensation is clear
"The Government should investigate whether inaccurate advice was given. Where there are no records they should change the presumption that they did nothing wrong to one that the customer was right in her recollection. And the Government has offered misleading or incomplete information or mis-advice was compensation should be paid."
Secretary of State for social security Alastair Darling told Mr Webb he would look into cases where people were misadvised.
"The law was changed in 1977 because we did not want married women to pay the reduced stamp as they would lose out in later life. I looked at the leaflets that were available, which I may say are infinitely better than the ones produced by the last lot on inherited SERPS, because they explained what happened. If the hon. Gentleman can come up with anyone who has been misled I will certainly look into it."
Anne Moir’s experience shows they may get blame rather than compensation.
20 May 2000