Whilst this isn't strictly news I've included it here because many of you look at this Forum. It concerns those of you who haven't paid the full amount of pension contributions.
Please note that it applies to widows and divorcees too, not just to those who are still married.
Prior to 2016, the state pension system comprised a basic pension plus an optional top-up (SERPS/Second State Pension). From 6 April 2016 that was replaced by a simpler flat rate state pension for new retirees, with a significant reduction in the number of years of national insurance contributions (NICs) needed to fund a 100% entitlement.
However, the previous arrangement – which remained in force for those who had already retired – contained a ticking time bomb.
Under the old system, many married women were unable to build up the lengthy employment history then required to fund a full pension in their own right; many others had paid a reduced “married woman’s” rate of NIC. This led to many women retiring on quite minimal state pensions.
To compensate for their inability to self-fund a full individual pension, these women could claim 60% of their husband’s pension entitlement from the time he reached retirement age. Similar provisions applied to widows and divorcées.
The main problem lay with women who reached state pension age before their husbands and would therefore be receiving the lower rate of pension until the husband’s retirement. By the time the man retired, many couples were unaware that this event could also affect the woman’s pension rights.
Prior to 2008, the wife’s pension uplift had to be specifically claimed. If the husband retired prior to 2008 – the pension entitlement of the wife was not retrospectively checked by the DWP.
From 2008, the DWP undertook to check each time a married man retired, and ensure that the spousal uplifts were automatically granted even in the absence of a claim.
Regrettably, it appears that this did not always take place owing to what the DWP described as “administrative errors”. As a result, as many as 200,000 women whose husbands reached retirement age since 2008 may have been underpaid for two decades. Underpayments totalling as much as £2.7bn have been mentioned. Since the scandal broke, the DWP is now actively reviewing all post-2008 cases.
n June, the Financial Times suggested that a further 50,000 women whose husbands had retired prior to 2008 might also have been affected. Underpayments for these women might total as much as £650m. Such cases are not part of DWP’s automatic review: individuals potentially affected will need to contact the Pension Service to ensure their circumstances are investigated.
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