State Pension For Married Women

mleonard79

Hi everyone,

I've not forgotten this thread - been reading the conversation that's been going on with interest! I'm not too sure what the HRP is - is this an entitlement for women who had children? If so I guess my mum should've got that for the two years in which she had me and my brother when she didn't work for part of them and only worked part-time the rest of them. Does this mean they should count fully then?? Also as regards the SERPS from what Margaret Claire was saying about you either get SERPS or an employment pension I don't expect my mum to have much SERPS if any as she is already getting paid a pension of just over £300 from her previous employer. Although my mum currently works for Norwich Union who will also pay her a small pension when she retires she worked for BT for nearly 25 years and gets a BT Pension now. In those years she was earning £20K plus most years if that makes a difference. She took voluntary redundancy 5 years ago and has worked for NU since then. Even if she just gets the basic £85 though that's more than she expected. I haven't heard back about the forecast yet, not sure how long it takes, but will let you all know when I do. Thanks.

Michelle

CIS

HRP (Home Responsibilities Protection) protects the NI record of any person receiving Child Benefit (or certain Carers), from the 6/4 ater the child DOB to the 5/4 prior to the 16th birthday (15yrs), where they have not accrued a qualifying yrs and do not hold a a married womans reduced rate election(small stamp).

HRP doesnt give you a yr towrds yor pension, it works by reducing the number you need. So if your mum needed 39yrs and had 2 yrs HRP, then she needs on 37yrs for a full pension,although by sounds of it she'll have more than 2 yrs if she only worked part time.

The way HRP works, it effectively makes any other qualifying yrs you have worth more, so she still needs to have earned other qualifying yrs to get a state pension (at at least 1 yrs must be from paid employment) and then she still needs a minimum number of yrs (25%) or she wont get any pension at all.

She may have some SERPS even if she was contracted out for part of the period, any time when she wasn't contracted out she will have accrued SERPS. From 2002, this has been reformed to State Second Pension (S2P).

margaretclare

Hi Michelle

It's not at all unusual for a woman to have a kind of hotch-potch of pension provision - in and out of employment, in and out of jobs that have a pension scheme, part-time work used not to carry an entitlement to join the pension scheme even if she wanted to, opted-in, opted-out, HRP while receiving Child Benefit (or Carer's Allowance). The one thing that stayed constant was that she had to have not made the choice to pay the smaller 'married women's contribution' which really excluded her from so much - she couldn't claim for periods of unemployment or sickness, as well as state pension entitlement.

HRP needn't necessarily only apply to a woman - you could have a man who gave up work to look after a disabled wife for instance. I've heard of single dads who were doing it when they were either widowed or wife had left. But in practice it's much more likely to apply to women at home looking after children.

Michelle, you asked when all this started. The legislation we have now followed the Beveridge Report of 1942, and you may be interested to know that there were two women - long-standing members of the women's suffrage movement - who wrote a counter-report criticising Beveridge as it applied to women which appears to have been ignored when the legislation was drawn up following the Labour landslide in 1945. Here it is:

http://library2.lse.ac.uk/collections/pamphlets/document_service/HD7/00000448/doc.pdf

Margaret Clare

keaskin

CIS wrote:

The forecast would most likely have been a predicted value - they do this to demonstarte what a person could get , if they started accruing qualifying yrs.

They do it so that people can see what they could get and hopefully try and facilitate it., not always possible though.

what was your date of birth ?, and I'll try and run through a few figures with you.

Feel free to PM me if you'd rather discuss it privately.

Thanks cis for pm reply

you explaind in plain english if only the pension forcast could do the same.
spoke to few friends who now realise they are in same position and wonderd can you answer these questions

is it possible to transfer some of husbands contributions as they have got enough years already for full pension.

once men reach 6o if they have enough qualifying years can they stop paying ni stamp

chancellor said in two thousand and ten somthing about new rules for women who payed married womens stamp do you know what this new new rule is and will it only apply to people retireing from that year.

mleonard79

Hi Margaret Claire and everyone who've been following this thread (sorry this'll be a long one!)

I got the online password and did my mum's pension forecast today. The results seem quite good. As we'd worked out she's already got 39 qualifying years meaning she gets 100% of the basic state pension. Her pension breakdown for right now is:


5 APR 2006 5 APR 2008 (estimated)

Basic Pension £84.25 £84.25

Payable Additional pension: £10.00 £14.67

Graduated Pension: £1.63 £1.63

Total: £95.88 £100.55


So when she reaches 60 she should get at least £100.55 per week according to this. It says that if everything stays as is she'll have accrued 41 qualifying years and she's also been awarded 3 years HRP in that so we estimated that about right! I assume that it won't change much other than perhaps go up a few pounds if the basic pension goes up any at budget times. The forecast also says "this amount may increase if additional contributions are added to your NI contribution record for the year up to 5 Apr 2006. We recommend you request another forecast after 1 Jan to see if your NI contribution record up to 5 Apr 2006 has changed." I'm not sure how it could change as its already July? I doubt it could be by much even if it does increase though.


It seems her BT pension was contracted out but the Norwich Union one obviously isn't hence she does have some SERPS. The forecast said that her total additional state pension is £60.49 but there is a contracted out deduction of £45.82 leaving £14.67. Norwich Union seem to pay around £1200 a year to a pension for her but this clearly isn't contracted out so I'm not sure how it works. She should get a small pension from that when she retires as if she can work til 65 as she plans then she'll have worked for NU for 11 years so I can't see that pension being under £50 p/month but as i don't know how it works I can't be sure. What we can be sure of is that she'll have over £800 a month which I think isn't bad for a pensioner (at least £400 from state pension and £400 from BT Pension which is currently £397 before tax but is also index linked so goes up every year.)

The only other thing to work out now is to do with the deferring of her state pension. Has anyone on here done this? My mum was planning on deferring it and taking a lump sum at 65. I see there is also the possibility to defer it and get a percentage of your pension instead. I think the lump sum is probably better than this but if anyone has any experience of either I'd be interested to hear it. If she took the lump sum and did get £100.55 per week the lump sum at 65 would be £26,143 but it says they also give you interest at 6.5% (can change with Bank of England Base Rate). Does anyone know if this is daily or annual interest and if it is taxed each year like normal savings or just taxed at the end? Sorry lots of questions! I was also wondering if
any of those expert mathematicians out there who can work out compound interest could tell me what that would make the lump sum at the end then as I'm not too great at these calculations. It seems if she takes it at 65 she'd have to pay 22% tax on the lump sum which is high but if she retired at 65 and didn't take it til she was 66 she should hopefully not pay any tax - have I got this right?

Thanks a lot for all your help, this has been very interesting. I've learned a lot about pensions! I can see what you mean about a hotch-potch of pension entitlement for most women M Claire, it must be a minefield. My mum's now seems straightforward but I can tell her's is an exception to the rule and she made some pretty good decisions along the way without really knowing it! It must be terrible to get to pensionable age and find you've got virtually nothing. My mum's very pleasantly surprised by all this as she didn't expect it all all. She genuinely thought pensions for married couples were a joint thing and you got less for being married and it was paid to the husband. I'm not sure what made her think that or if it's ever been like that but its good news for her for once. I'm very pleased for her as I've watched her work hard all my life and she deserves a pension like this in her own right. I should perhaps look at my own pension forecast but I think that would make a lot worse reading - I'm 27 and have been ill several years so will be well behind on my qualifying years, its not something I'd ever thought about before but it does scare you a bit when you look into it!

Regards

Michelle

CIS

Thanks cis for pm reply

you explaind in plain english if only the pension forcast could do the same.
spoke to few friends who now realise they are in same position and wonderd can you answer these questions

Is it possible to transfer some of husbands contributions as they have got enough years already for full pension.

once men reach 6o if they have enough qualifying years can they stop paying ni stamp

chancellor said in two thousand and ten somthing about new rules for women who payed married womens stamp do you know what this new new rule is and will it only apply to people retireing from that year.

When the husband clams his pension (if its after the woman), the pack he gets has a claims form in for the wife to complete to claim off his, if the woman retires after the man then she just completes the standard claims form (BR1) that she gets and the rest is automatic.

Providing hes got his pension already, and they've claimed theres, then the top-up will be automatically applied, if it hasn't then 99/100 there not entitled to any top-up.

A man at any age can stop paying NI, unless theres an accrued liability to pay NI (employment/some S/Employment), in which case it has to be paid.
If a man stops paying NI at 60, then he will get the next 5 yrs NI credited for him , providing hes not S/E withan NI liability, and not outisde of the UK for more than 6 months of the tax yr.
Note that if hes accruing qualifying yrs through employment/benefits between 60 and 65, he wont accrue Auto Credits as well, its 1 or the other.


The initial plans are that for people retiring after 2010, there will be a requirement for 30yrs to get a full pension , so it will in theory be easier to achieve, however, tehre are rules taht have not been clarifies yet: no mention has been made how existing HRP will affect this figure of 30yrs (will it reduce it as present) as after 2010 then plan is to change HRP to a credit system.
As of yet, no plans have been offically confirmed, later in the year they should be issuing some further information regarding the changes.

Debt_Free_Chick

mleonard79 wrote:

The forecast also says "this amount may increase if additional contributions are added to your NI contribution record for the year up to 5 Apr 2006. We recommend you request another forecast after 1 Jan to see if your NI contribution record up to 5 Apr 2006 has changed." I'm not sure how it could change as its already July? I doubt it could be by much even if it does increase though.

Because if she worked in the 2005/2006 tax year, the employer's NI records have to be sent to HMRC by 5 July, at the latest. If the employer left it until the last minute, then there might be some more NI from last year to go on to her record.

Of course, if she hasn't worked and definitely paid no NI, then the position wouldn't have changed.

HTH

CIS

So when she reaches 60 she should get at least £100.55 per week according to this

Thats assuming she carries on under the same circumstances as she is now, if her income goes up or down the amount of AP will change.

The forecast said that her total additional state pension is £60.49 but there is a contracted out deduction of £45.82 leaving £14.67.

The COD will be for the time she was in an occupational scheme and is a government calcualted figure on what the pension should be worth, but as most have underperformed the amount they pay is less than the COD that has been deducted - theres nothing you can do about it though.

If you choose a lump sum, then its taxed when its claimed and depends on the tax band your in for that yr based on your normal income - if your paying at 22% the lump sum will be taxed at 22%.

You can see example figures in this booklet:http://www.thepensionservice.gov.uk/pdf/spd/spd1apr06.pdf

The lump sum is possibly the best option depending on tax rates, if in the 22% or 40% band it may not be as good an option as it would be for a 0% or 10% tax payer.

Remember that if you take the increments option, your giving up £100 x 52 = £5200 for each yr, to get back an extra pension of £520 p/a, so even 1 yr of deferral for increments would lose you £4700. (less than any tax you would pay if you claimed it staright away)

With a lump sum, you would give up £5200 and get a lumpsum of around £5370, if your paying 22% then you have made a loss of £1100, afte 5 yrs you could get £30580 in return for giving up £26000 in pension, at 22% tax your £3000. Unles your going to be in the 0% or 10% tax band at the date of claim (or teh following tax yr), you'll lose out which ever method you take.

margaretclare

mleonard79 wrote:

Thanks a lot for all your help, this has been very interesting. I've learned a lot about pensions! I can see what you mean about a hotch-potch of pension entitlement for most women M Clare, it must be a minefield. My mum's now seems straightforward but I can tell hers is an exception to the rule and she made some pretty good decisions along the way without really knowing it! It must be terrible to get to pensionable age and find you've got virtually nothing. My mum's very pleasantly surprised by all this as she didn't expect it all all. She genuinely thought pensions for married couples were a joint thing and you got less for being married and it was paid to the husband. I'm not sure what made her think that or if it's ever been like that but it's good news for her for once. I'm very pleased for her as I've watched her work hard all my life and she deserves a pension like this in her own right. I should perhaps look at my own pension forecast but I think that would make a lot worse reading - I'm 27 and have been ill several years so will be well behind on my qualifying years, its not something I'd ever thought about before but it does scare you a bit when you look into it!

Hi Michelle

Very good news about your mum.

What your mum says about 'pensions for married couples being a joint thing' was how it was meant to be in the original welfare state legislation way back. Your mum probably heard women around her talking this way - it's a common viewpoint and has only changed gradually of recent years with the idea that everyone should have their own pension provision, married or not. Society has changed a lot, divorce has become more common, change has come gradually over the years.

This year the Fawcett Society celebrates 140 years since its founding by Millicent Fawcett. I've read in their papers that in that year, 1866, the discussion about women's suffrage really started, and there were people who said that even if women were given the vote it should only be for single women and women householders, because a married woman gave up everything in her own right. As a famous 18th century judge put it 'in marriage there is one person, and I am he'. All this may seem to be a bit 'off topic', but it does explain some of the misconceptions that are around even today, as your mum has found. The Chancellor also talks about 'pensioner couples' and he includes even couples like us, where both pensioners have their own independent income!

About your own pension provision, although you were ill a lot, were you claiming any benefits while you were ill? Not sure what it's called now, but anyone who used to claim unemployment or sickness benefits got their contributions credited. Everyone should make sure they do this. Even if you think you're not eligible for any money e.g. due to being in full-time education after age 16, you should still sign on and get the contributions credited.

Sorry, I can't work out whether your Mum should defer or not. Someone else will have more mathematical ability to do that! I'm just glad I've been able to help a bit.

Best wishes

Margaret Clare

CIS

Because if she worked in the 2005/2006 tax year, the employer's NI records have to be sent to HMRC by 5 July, at the latest. If the employer left it until the last minute, then there might be some more NI from last year to go on to her record.

Usually this date the yr for 05/06 will have gone on, but is sometimes takes up until the October after the end of the yr for an NI record to be updated.