06 May 2008 – Drive to help women boost their state pension

Women pensioners could boost their state pension or even be in line for a windfall payment under special terms.

But they need to act quickly as the deal, which allows people to pay for missed National Insurance contributions at a reduced rate, will run out in less than two years.

Women who have gaps in their National Insurance record for years between April 1996 and April 2002 are entitled to ‘buy back’ the missing years at a special rate. Any improvements in State Pension are backdated to when women first drew their State Pension (usually age 60) and could result in a lump sum pay out.

Pensions Reform Minister Mike O’Brien said:

“Generous rules enable women to boost their pension or to receive a backdated sum – typically about £1,400. Whilst making voluntary National Insurance contributions won’t be suitable for everyone, we want to give people the right information to help them make a choice.

“We’ll also be spending about £1.5m on work to ensure that married women are not missing out on the chance to get some backdated pension. We will get in touch with those women who may be entitled to a lump sum and who were not contacted on a previous occasion. Some people won’t even need to hand over any cash upfront to benefit.”

The Pension, Disability and Carers Service will be reviewing the NI records of a group of around 73,000 women who could potentially use the special terms to claim some backdated pension for a past period.

These women have not been previously contacted by the Department because they were in receipt of a married women’s pension and could not improve their weekly entitlement. However, the Government will assess if they could claim a backdated ‘lump sum’ using the special terms. The Pension, Disability and Carers Service will contact those women who could potentially benefit.

The DirectGov and Pensions Service websites have been updated providing simple information allowing people to identify whether they could benefit. People can also call the Pension, Disability and Carers Service on 0845 602 1785 to get a factsheet so they can work out whether they are eligible.

Women who reached State Pension age before October 24, 2004 may not have to pay any money up front. If the amount they are owed in backdated State Pension is more than the cost of buying missing National Insurance years the DWP will simply pay the difference.

People who reached State Pension age before October 24, 2004  have up to April 5 2010, to benefit from these special terms – those who reached State Pension age on or after October 24, 2004 have until April 5, 2009 .

In a separate exercise the DWP is working with HMRC to further ensure women are getting the State Pension they are entitled to. Later this year we will check thousands of women’s National Insurance records to make sure the years they have spent caring for children are properly recognised and they were registered for Home Responsibilities Protection (HRP), which effectively reduces the number of years National Insurance someone needs to have paid to claim a State Pension.

Mike O’Brien added:

“Women eligible for Child Benefit should have had HRP automatically recorded on their National Insurance records.

“We want to be sure women pensioners are getting the State Pension they deserve. Working with HMRC we will be ensuring they get their entitlement.”

Notes to Editors

1. To help the Pension Disability and Carers Service deal with enquiries more effectively, members of the public are urged to look online at www.thepensionservice.gov.uk or contact 0845 602 1785 for a factsheet.
2. The special rate applying to missing National Insurance contributions for the six years between 1996-97 and 2001-2002 applies because ‘deficiency notices’ were not sent out during this period to people with gaps in their NI record until 2004-5.
3. If you reached State Pension age before 24 October 2004 (men born before 24 October 1939 and women born before 24 October 1944) you may not need to pay contributions up-front because the cost can be offset against any arrears you would receive. This concession applies only to people who were pensioners, or coming up to State Pension age, when the Department for Work and Pensions ran a special exercise to contact people about deficiencies in their contribution records. If you reached State Pension age on or after 24 October 2004 you will need to pay for the contributions up-front before you can increase your pension.
4. If you reached State Pension age before 24 October 2004 you will need to buy the contributions before 6 April 2010 to benefit.  If you haven’t yet reached State Pension age, or reached State Pension age on or after 24 October 2004, you will need to buy the contributions before 6 April 2009.  There are different time limits because people who reached State Pension age on or after 24 October were contacted by HMRC in 2004 but those who reached State Pension age were contacted by DWP in 2005.  These time limits are designed to give people the same time to pay contributions as they normally get under deficiency notice exercises.
5. Buying additional years of National Insurance contributions will not suit everybody – for example if they are entitled to Pension Credit which already guarantees them an income of £124 per week.
6. DWP has previously spent £33m contacting over 400,000 pensioners, or people about to reach State Pension Age, who did not receive a deficiency notice for the period 1996 – 2002, and could potentially improve their state pension. Around 70,000 took the opportunity to make additional NI contributions.

 

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