David Heath MP, Liberal Democrat Member of Parliament for Somerton and Frome
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Constituency office: 14 Catherine Hill, Frome, Somerset, BA11 1BZ. Tel: 01373 473618
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Pensions Justice for Women
case studies from letters received by Steve Webb

1. The issue:
Before 1977, a married woman could opt to pay a reduced rate of National Insurance Contributions on her earnings, which would disqualify her from the benefits received from a NI record (full state pension, incapacity benefits etc), but give her a 60% pension through her husbands contributions when he reached 65. In 1977, this ceased to be an option for those newly entering employment. Those already paying it could opt back to paying a full NI rate, with all the attendant benefits restored, or could remain on the reduced rate until: (a) they reached 60; (b) they divorced; or (c) they spent more than 2 years out of the labour market.

2. The problems:
a) Many women did not appear to realise that by paying the reduced rate they would be forgoing their future pension rights, and on applying for a pensions forecast, are now finding that they are eligible for a pension of only a few pence.

b) The then DHSS allegedly advised some women not to opt into paying the full rate because they would receive 60% on their husbands pension anyway. But this does not happen until the husbands themselves reach 65, and women with husbands who retire after them have found themselves with no independent income.

c) In 1989, further changes in the law reduced the NI bill for low earners, whilst ensuring that they were entitled to the same pension rights as higher earners. It was now advisable for some to opt back into the full rate scheme: low earning women could now receive the full state pension in their own right. Yet many of these women seem not to have realised this and ended up paying more NICs on the reduced rate than their colleagues paying the full rate for a full state pension.

Case studies

Mrs Watts of Weymouth paid reduced contributions during 33 years of part time work for the NHS, working unsociable hours and weekends. She feels that she was given no advice either by her employer or by the DSS. Although she paid reduced rate contributions, these in some cases amounted to more than colleagues were paying at the full rate. She says: The difference was that my contributions bought me nothing whilst theirs bought them a pension.

She applied for a pensions forecast in 1992 and was horrified to see that she would receive 7p a week. She says that: at no time was I told that, had I increased my contributions, I could have&collected a small pension in my own right aged 60. I have only just discovered this by discussing my plight with older women who have been in this position and passed on their knowledge&I feel angry that not only was I misinformed in the seventies regarding my pension but as late as the nineties bad advice was still being given out.

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Mrs B of Brighton is in her mid-50s and has worked part time for the same organisation for 20 years. Because she was not earning a great deal she paid the reduced rate, which I think was the norm for married women at that time. (1981). No-one informed me that this would affect my pension. She has now been told that she will receive a pension of 17p a week, which is a double whammy as she was not allowed, as a part-time worker, to join her organisations occupational pension scheme. (A recent House of Lords ruling means she can now buy back contribution years but no-one seems to know when this will be enforced). She says: I feel we were treated very unfairly and not given the correct advice.

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Mrs C of Essex tells the story of herself and four female friends, all aged 60. They all married in about 1960 and elected to pay the married womens stamp to assist family finances. They all took 11/12 years break to bring up their families and all joined the same company in 1972 as part-time employees and worked until their retirement at 60 in 1999. At no time in 1989 when National Insurance Contributions were restructured were any of us informed in any way by the DSS of a way to increase our contributions to enable us to receive a pension. The only advice that they received was a remark by their branch manager that you are too old to change it is too late now.

Three of the women now receive 60% of a full pension based on their husbands contributions. One, a divorcee, also receives a pension based on her ex-husbands contributions. All of these womens husbands were older than them. Mrs C herself receives 17p a week, because her husband is the same age as her and has not yet retired. This is despite the fact that 3 of the other men took early retirement.

Despite all 5 women having an identical work record, one of them will receive at least £10,500 less over the next 5 years and remain totally dependent on her husband to meet all her financial needs.

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Mrs D of Plymouth sent for a pension forecast at the age of 56, planning to retire at 58, with her husband when he reached 60. She was mortified to be told that she would only qualify for 9p a week, because I was paying £78 a month NI Contributions which had to be sufficient to qualify me for a state pension. Only then did she discover that she had been paying reduced contributions since 1974. She was assured that it was legally her responsibility to have opted for a full rate contribution, which I would have if only someone, somewhere had made me aware of what the E on my salary slip meant!!

She was also puzzled by the forecast that stated payments have to be made for 39 years to qualify for a full pension. Though she had paid 9 years at the full rate, she still qualifies for only 9p equivalent to 1p a week for each year paid at the full rate. She asked about paying NICs in arrears to qualify for more, but was told she could not.

She says: I feel I have been let down by my employer who has never made any attempt to alert me to the fact that I have been paying a reduced contribution all these years, and what the outcome would be, and bitter with the Authorities that they have not written out to married women to ask them if they wish to continue paying a reduced stamp or even to make them aware that they are paying a reduced stamp!! She also feels cheated out of two years of retirement with her husband as I now feel obligated to remain in employment until the statutory age of 60.

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Mrs E of Dorset married in 1955 and was advised to pay reduced rate contributions. A year later, a colleague advised her that she ought to pay the full rate instead, in order to get a pension in her own right, and she notified her employer that she wished to do this. However, recently and to my horror, when I got my pension forecast I was told that I had only paid married rate. She requested an interview with her employer but had no written proof that she had asked to pay full rate contributions so many years previously.

Since returning to work after having a child, she did pay full contributions but the nature of her husbands job, in the Royal Navy, meant that the family moved around a lot and some years she did not pay a whole years worth of contributions. She was not allowed to pay back the few missing weeks and so ended up losing 7 years worth of contributions because all these incomplete years count for nothing.

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