Are you or retired female relatives owed thousands of pounds in underpaid State Pension?

Faith Archer

by , Personal Finance Journalist and Blogger

at Much More With Less

19 July 2021 /  

Shocked lady staring at a laptop screen

Hundreds of thousands of retired women are due almost £3 billion in underpaid State Pensions. While some women on small State Pensions are owed tens of thousands of pounds in backdated payments, plus higher pensions every week in future.

For women born before 6 April 1953, who are married, divorced or widowed, and get less than £82.45 a week in State Pension, it’s worth checking if you’re entitled to more, particularly if your husband, ex-husband or late husband had a full basic State Pension.

State Pension based on the husband’s contributions

The State Pension provides a financial lifeline for millions of retirees but changing rules have created a tangled mess. I find it particularly infuriating that for those reaching State Pension age before April 6, 2016, the whole system was designed around married couples, where the woman was financially dependent on a male breadwinner.

Under this previous system, married women are entitled to State Pension payments based on their husband’s National Insurance Contributions (NICs). Many older women only built up low State Pensions in their own right, if they made little or no NICs or paid Married Women’s Stamp at a reduced rate. Instead, married women were entitled to a top up once their husband turned 65, dragging the wife’s payments up to 60% of her husband’s basic State Pension.

Where the husband is on the full basic State Pension - currently £137.60 a week - the wife would be entitled to £82.45 a week. Where the husband gets less, the wife would get 60% of the lower amount.

Why did women get underpaid?

Many missed out on extra money either due to government computer glitches or because they didn’t realise they needed to claim once their husband hit pension age. How much you’re owed depends on whether your husband reached 65 before or after 17 March 2008. If he reached State Pension age afterwards, when the increase should have been automatic, you’re entitled to a lump sum worth all your underpayments right back to your husband’s 65th birthday.

Some women over 80, regardless of marital status, may also have missed out on an ‘over 80s’ top up that ought to have been added automatically.

This money should now be paid without you lifting a finger, as a team of civil servants at the DWP is now trawling through the records to identify who’s owed what. The Office for Budget Responsibility estimated that it may cost almost £3 billion over the next six years to sort out these underpayments.

However, if your husband turned 65 before 17 March 2008, you can only backdate your claim for a year - and will need to contact the Pension Service to get any uplift.

Who else could be missing out on State Pension payments?

The underpayments aren’t restricted to women who are still married. In rare cases, husbands may have been due extra State Pension due to the wife’s National Insurance record. Divorced women may have missed out on extra money based on their ex-husband’s NICs. Widows may have been underpaid while their husband was alive, and not have received extra due after his death. Finally, families of those who were underpaid their State Pension but have since died, may be able to claim too.

If you think you might have been underpaid your State Pension, contact the Pension Service on 0800 731 0469. Phone lines are open Monday to Friday, from 9:30am to 3:30pm.

Faith Archer is a Personal Finance Journalist and Money Blogger at Much More With Less. Check out Faith and Lynn’s videos about spending during lockdown and after lockdown.

Risk warning: As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.

Ready to close the pension gap and take control of your pension?

Don’t put it off any longer, start consolidating today and close the pension gap.

Get started now

Mobile PensionBee analytics chart
Mobile PensionBee analytics chart
Apple Store logo Google Store logo