Reduced rate NI contributions affecting widows

Lilli

My question is:- Who was eligible to pay reduced-rate contributions in 1977 ?
I ask because my husband died in 1973 - I had worked before marriage, but not during. In April 1977 I started working in my late husbands company which was then being run by the Trustees of my late husband estate. The accountant of the company (one of the Trustees) told me I was entitled to pay reduced-rate stamp as I was now a widow. It wasn't until I recently applied for my retirement pension that I learnt this 'small stamp' as it was referred to at the time was, in fact, the Married Womens stamp and, of course, the contributions I paid during the 20 years I worked for the company do not count towards my pension. Nothing was explained to me at the time regarding the consequences of paying this stamp - had it been referred to as a Married Womens stamp I would have queried my eligability to pay it as a widow. I find it completely illogical that a widow could be entitled to pay this contribution as I understand it was introduced for married women relying upon their husbands contributions for their pensions upon retirement. I would add, nobody seems to be able to give me an answer to my question through the various DWP departments.

margaretclare

I think the accountant who gave you that information was wrong. There was a Married Women's Reduced NI contribution, also called the 'small stamp', which many married women chose/were persuaded to change to because they expected to receive retirement pension when both husband and wife retired.

When you become a widow you're no longer a married woman - obviously! You're single again to all intents and purposes.

This option - to pay reduced contributions - disappeared for any woman who married after April 1978. That's probably why no one at the DWP can give you an answer - they're all too young!

I myself have never heard of this particular slant on the problem. Others may be more helpful.

There is also the fact that you are still entitled to draw retirement pension against your late husband's contributions. This happened to me when I was widowed at age 57 - when I reached 60 I was given the option of drawing retirement pension against my late husband's contributions or against my own, whichever was more favourable. Fortunately, I hadn't fallen into the 'small stamp' trap and had always paid full contributions, so I qualify for SRP in my own right. This continues in my own right even though I have remarried.

HTH

Lilli

Thanks for your interest Margaretclare I do appreciate it. After numerous calls to various DWP departments I did suggest that none of the present staff would be old enough to give me an answer, although a couple of people did express surprise at my situation. I just find it hard to understand how, as a widow, on record as receiving Widowed Mothers Benefit at the time, I could have been eligible to pay these contributions. I just need to find out if any widows WERE eligible, for one reason or another, before I persue my case with the DWP

margaretclare

As I said, I think that accountant gave you wrong information. It doesn't surprise me - I've heard of women who, on getting married, were told by their company's accountant that they 'had to' pay the reduced contribution, even though they'd have preferred not to! There are a lot of women newly-retired or just about to retire who were - 'conned' is the word I prefer to use, misled, trusted someone whom they thought was better informed, whatever.

The upshot is that if those women are still married, when their husband retires they get 60% of the 100% that he gets. If they'd paid full NI both would have got 100%. It's obvious that 200% is better than 160%!

You were a single woman again from the time your husband died and as such you should have been paying full NI contributions while working.

As it is, you can claim your state pension on his contributions. If you remarry, you can claim it on your new husband's contributions. But it will still be 60% of what you'd have got if you'd paid full contributions in your own right.

Have you thought of writing to your MP about this?

JuneBow

Hi Lilli,
If you were married or widowed before 6.4.77, you had the right to pay the reduced liability or "small stamp", as it was called.
You had to apply to do this before 12.5.77. as the option was withdrawn after that date, so it depends on when you started paying the small stamp as to whether the accountant was wrong or not.
I would doubt very much indeed, whether he was wrong, because if if he had been misinformed, and gave you the wrong information, it is unlikely the DSS at that time would have been able to process a small stamp if you were after the cut off date.
Computer record keeping for retirement pensions came in about 1979, and I beleive NI was computerised for a couple of years before that.
It is very likely that who you spoke to would not know these rules, as they were probably not working there then, but the information is available to them, so they should have said that they would find out and get back to you.
Therefore, before you do anything silly like write to your MP before you know the whole story, you should write to them to ask the exact date that the NI contributions commenced. My guess, however, is that it was before the cut off date, as the computer would have been unable to accept the reduced rate.
If it was definitely April 1977 you started work (rather than 13 May or after), you were entitled to pay the small stamp.
If you never remarried, you would have been receiving widows pension before you were 60, the amount which would depend on what age you were when your Widowed mothers allowance ended, so probably, in terms of retirement pension, you were probably better off, but it is difficult to say without knowing more info.
However, the small stamp did not allow you to claim unemployment benefits, or sickness benefit (except housewifes non contributor invalidity pension or severe disablement allowance as it is now called)
So the point is
a yes a widow is entitled to pay reduced stamp
b accountant was unlikely to be wrong regarding dates, as the reduced stamp would have been rejected.
Hope that helps.

chesky369

I don't know if widows were treated differently to separated or divorced wives, but I suspect not. The rule was that you were eligible for the reduced stamp whilst you were married but that as soon as you were separated or divorced (and also I suspect widowed) you were no longer living as part of a married couple and were not entitled to the reduced stamp. I'm pretty sure your accountant was wrong. Altough women didn't necessarily appreciate it at the time, it was actually the best thing for them (as they realise now).

Lilli

Thanks JuneBow for your contribution to my query. I was advised by the DWP to put my question to them in writing and I will do so, but I did feel it was possible someone could give me independant advice, either by their own experience or knowledge of the system applicable at that time. I have done quite a bit of research recently and am aware of a number of the points you mention, but I still find it difficult to understand why widows would be considered in the same catagory as a married women in this particular area of government legislation when the consequences are so far reaching in the event they do not re-marry, as in my case.

JuneBow

Lilli wrote: »

I still find it difficult to understand why widows would be considered in the same catagory as a married women in this particular area of government legislation when the consequences are so far reaching in the event they do not re-marry, as in my case.

I cannot answer, the question WHY they are treated the same only, that they are treated the same.
Perhaps it was because when you are widowed, you get WMA when you have children, then go on to receive widows pension if you are over 45, so perhaps it is because it is probably more advantageous to you. I think it probably is, but could not be sure without knowing much much more.
All I know is that if you were widowed, then you were eligible, and because of computerisation at the time, cannot see how the computer would not have rejected a small stamp if you were not eligible to pay it.
Sorry I cannot answer your question.

Lilli

Logically, Chesky369, this is what I would have thought. As I mentioned in my original post, I was told nothing of the consequences relating to the payment of this 'small stamp' - as Margaretclare points out, in those days most women didn't query actions of professionals as they were expected to do the right thing, having more knowledge than the lay man, it was all down to trust.

margaretclare

So it all turns on what date in April 1977 you started work for your late husband's company?

Did you get Widowed Mother's Allowance, and did you get Widow's Pension?

JuneBow

Yes margaretclare, you are right, it is the date in April 1977 lilly started working which is the turning point.
Found this
http://www.edinburgh.gov.uk/COI/Welfare_Benefits/447.html
I would doubt very much whether the computer would have accepted the error, even if the accounant has misinformed you that you were entitled.
It is arguable as to whether you are better off anyway, given you did not remarry.
From memory, you would have had to sign a form of election to say you understood the implications of reduced stamp, so you could not really say you did not understand the rules.
You should really get something in writing from them, as you should not have been fobbed off, but I think you will get nowhere, even if, which is unlikely, that you are worse off.