Are you getting the state pension you deserve?

The Beveridge system has short-changed thousands of women on their state pensions, says Steve Webb.

How would you know if you are getting the right amount of state pension? Most people would assume that the Department for Work and Pensions looks at your national insurance record, works out what you are due and pays the right amount automatically.

But something I learned earlier this year disturbed that view of the world.

Although the state pension system has now changed for those who reach pension age from 6 April 2016 onwards, the large majority of retired people have had their pensions worked out under the ‘old’ (pre-2016) system. And among that group I believe there are tens of thousands of women who are not receiving all the state pension they could be getting.

The root of the problem lies in the way the system was first set up after the Second World War. The original model set out by William Beveridge was that in each household there would be a male breadwinner and a wife who, “because she has other responsibilities” (as it says in the Beveridge Report), would be financially dependent on her husband.

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Limited records

A key feature of the system is that a married woman who has a limited record of NI contributions in her own right can claim a partial pension based on her husband’s record of NI contributions when he reaches pension age.

Specifically, she can claim a basic state pension of around 60% of her husband’s basic state pension. In 2020/21, where a husband gets a full basic state pension of £134.25, his wife can get £80.45 per week based on his record.

I had always assumed that this uplift was awarded automatically when the husband retired. But while writing a column for a newspaper, I learned that this has only been true since 17 March 2008. Prior to that date, a woman who wanted her pension uplifted when her husband turned 65 had to make a claim.

And it turns out that many thousands did not do so. As a result, for the last 12 years or more they have been drawing a state pension that is less than they are entitled to.

The good news is that it is not too late for them to make a claim to have their pension uplifted. The bad news is that the uplift will only be backdated for 12 months. As things stand, the money due for the rest of the period is lost for good.

When challenged, the Department for Work and Pensions says that it used to write to women in the run-up to their husband reaching 65, to alert them to the potential for an uplift. Not surprisingly, many of the women who missed out say they received no such letter.

Married woman can check whether or not they are entitled to this uplift. I have prepared a simple website calculator which you can find at lcp.uk.com/is-your-state-pension-being-underpaid/.

Using information about your own basic state pension and that of your husband, plus your dates of birth, you can clarify whether this issue is likely to affect you. If it does, you can contact the Pension Service and ask for the uplift.

A much wider problem

But in the course of looking into this issue I found a much wider problem. This affects a larger group of married women, divorced women and widows, who are all receiving less than they should be. It includes:

- Married women whose husband turned 65 after 17 March 2008, whose uplift should have been applied automatically but who did not receive it; a number of these women have now applied and received thousands of pounds in backdated state pension all the way back to when the error occurred;

- Divorced women who did not have the benefit of their ex-husband’s NI contributions when they retired;

- Widows who should be getting 100% of the basic state pension of their late husband, but who are actually drawing a pension well short of this.

The moral of the story for women on the old pension system is simply not to take it for granted that you are getting the right amount of money. Make sure you understand why you are getting what you are getting, and if it’s not clear, contact the Pension Service for an explanation.

Steve Webb is a partner at pensions consultant Lane Clark & Peacock.