Would I be entitled..?

aquilaM

I am a 31 year old mother. I haven't worked since April 2003 when I went on maternity leave.My employment history is pretty sketchy. I was at uni until 21then worked part time for a year until returning to uni for post grad training. i worked as a supply teacher for 4 years working for different lea.

I am getting quite concerned about what will happen at retirement age as i have not paid much in Ni contributions.

My husband works full time, and has a few small pensions from previous employment. He is looking at the moment to set up a private pension ( when his student loans are paid off), but is not sure if saving and moving to a bigger house (thus downsizing in the future) would be better (as well as a pension) .

I am more worried that I am entitled to nothing, although my husband believes that I would be entitled to something through him (He pays £270 approx a month NI contributions). But a friend of mine says that isn't true.

Where do I start....

Ax

seven-day-weekend

You start by asking for a State Pension Forecast.

http://www.thepensionservice.gov.uk/atoz/atozdetailed/rpforecast.asp

However, if you have been claiming child benefit, this will entitle you to Home Responsibilities Protection, which reduces the number of qualifying years you will need.

If at the end of your working life you do not have enough qualifying years, you can claim 60% of the full State Pension from your husband's contributions, but only if you are still married.

The situation may not be as bad as you think - apply for the Forecast online and you will soon know!

CIS

If at the end of your working life you do not have enough qualifying years, you can claim 60% of the full State Pension from your husband's contributions, but only if you are still married.

Generally speaking, if you where divorced or widowed at SPA you would be able to get 100% state pension.

as sevendaywekkend suggests, the state pension forecast is the way to go - unless the new 30yr rule is introduced, you'll never be able to get a 100% pension, but you should be able to acheive more than 60% - if you cant achieve more than 60%, then quite often its not worth your while going out of your way to pay NI - if you struggle your way to , say, a 55% pension, then you'll get it topped up to 60% - exactly the same as if had, say , 20% in your own right.

seven-day-weekend

Just interested, if a husband does not have enough contributions and his wife does, can he also claim 60% from her?

CIS

Just interested, if a husband does not have enough contributions and his wife does, can he also claim 60% from her?

only once the rules change in 2010

margaretclare

seven-day-weekend wrote:

Just interested, if a husband does not have enough contributions and his wife does, can he also claim 60% from her?

I don't think so, because the way this was all set up, at the time of the Welfare State legislation in the late 1940s, there was this widespread assumption that a married woman was 'dependent' on her husband, didn't work and didn't need to accrue a pension in her own right. Even if she worked she was supposed to pay a smaller NI contribution which only covered her for industrial injuries, not for pension, unemployment or sickness benefits. When they came to retire, as a couple are not supposed to need as much to live on as 2 single people, he got 100% and 60% for her.

This was the state of play up to April 1978, when it was no longer allowed for a woman who married after that date to opt to pay the smaller NI contribution. At that time also, the idea of Home Responsibilities was brought in, which meant that a woman at home with children claiming Child Benefit (or caring for someone) is entitled to HRP.

I actually disagree with CIS. IMHO it is absolutely invaluable for a woman to have state pension in her own right and not 60% via her husband. I realise I'm in the 30% - a minority - of retired women who get SRP in my own right, from my own contributions. I value the independence, the feeling that I earned it, I did it myself, not through any bloke however near and dear to me.

There are ways of topping-up missed contribution years later in life, and someone as young as this is sure to be back in the workplace at some point. The original idea - the 1940s idea - was that a woman would NEVER work outside the home. History has proved this wrong.

Margaret

EdInvestor

CIS wrote:

only once the rules change in 2010

Pensions were the only thing left out of the 1975 Sex Discrimination Act which otherwise gave women equal rights in financial services.

Amazing that it's taken 35 years :eek: to finally get it sorted.

CIS

I actually disagree with CIS. IMHO it is absolutely invaluable for a woman to have state pension in her own right and not 60% via her husband. I realise I'm in the 30% - a minority - of retired women who get SRP in my own right, from my own contributions. I value the independence, the feeling that I earned it, I did it myself, not through any bloke however near and dear to me.

In principal it may be ideal for a woman to have her own pension, indeed its 100% important for anyone, but when at pension age, mnoney is tight for many people and potentially spending money on a 30 0r 40% state pension which gives no more than spending 0% (as they'll still get 60% regardless), isnt good monetary sense.

I fully support anyone getting the 100% if they can, but financial sense says you have to call it a day at times and use the system to your advantage.

jamesd

aquilaM, you should investigate the two of you paying into a pension for you in addition to one for him, since the pension in your name will continue to provide you with benefits after his death. Payments from it would also benefit from your own tax allowance and rate, reducing the tax liability compared to all the money going to him.

The state pension looks like a fairly good deal and since there are time limits on paying additional voluntary contributions, it's worth getting a forecast and considering paying the AVCs for any missed years. Also worth checking to make sure that you're being credited properly for the Home Responsibilities Protection.

If the student loans your husband has are at below normal market rates (say, inflation rate only) then it's likely to be best to take as long as possible to pay them off and start investing in pensions now instead of paying off the loans more quickly than required. The pensions can be expected to earn more in value than the cost of the interest.

Equity (shares) investments in a pension can be expected to provide better growth than property investing, so are likely to be a better idea. It's also good to spread your risk and since your home is a significant property portion, equities would be a good balancing part of the mixture. Assuming you can handle the ups and downs, 100% or other high equity investment portion is likely to be appropriate for relatively young people contributing to a pension.

For both of you, it's worth considering stocks and shares ISAs instead of pensions if you're basic rate tax payers. If not earning enough to pay basic rate tax I don't know which is best - wait for comment from others. The ISAs are more flexible than the pension in part because you can keep the money invested instead of being forced to take some in an annuity when you still have 30 years of retired life to go.

Getting the pension forecasts for each of you, thinking about what you'd like to do and then discussing your situation with an IFA experienced with retirment planning may be a good idea. It'll probablt cost some money but early advice is likely to get you started on a good path and recover the money in improved results later.