Delayed state pensions: What retirees who put off claiming are entitled to

I am hoping you can help after I read a previous column of yours on married women’s National Insurance payments.

I was born in 1952. I have been trying since last November to get a pension forecast from the Department for Work and Pensions so that I can see if I can afford to retire.

I am married and my husband is alive and receiving a state pension. I have paid a married women’s stamp for over 30 years and I am still working but now exempt from paying NI.

I have finally received a letter from the DWP saying to contact them under this reference, but no reference number or details are on the letter.

The letter says I have put off claiming state pension since 2014 and that my weekly rate would be £14.94. I think it is saying I would get an extra £12.34 a week if I had started taking my pension from October 2022.

I have just received the letter but on trying to telephone the number has changed. I thought about writing but then thought how long it has taken for this response – nearly a year – so thought I would try you first.

Can you help or just clarify what I should expect to receive. I think it may be £85 a week according to your column.

The Government website says you can dispute your amount once you claim but I would really like to know now so that it is right from the beginning.

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Steve Webb replies: Having delayed taking your pension for around eight years, it is obviously important that you can now get accurate information about what you are entitled to so that you can make an informed choice.

I am shocked that it took nearly a year to get a letter from the DWP about this and – as I shall explain – that the information it contains is completely wrong.

Even though you have not yet claimed your state pension, because of your year of birth (1952) you come under the old state pension system, before significant changes were made in 2016.

Under that system, when you put off claiming your pension you can either have a much bigger pension when you eventually retire or you can opt for a lump sum (plus a bit of interest) for all the missed payments.

When you reached pension age in 2014, your husband was under state pension age so your entitlement at that point was based purely on your own National Insurance record.

As you paid the reduced ‘married woman’s stamp’ for several decades, you had built up very little state pension in your own right.

However, the point that the DWP seem to have missed in its original letter is that in 2016 your husband reached pension age.

At that point you became entitled to a married woman’s pension based on his contributions. In today’s money that would be worth at least £85 per week.

The first letter you received from the DWP (which took nearly a year to obtain) made no mention of this enhanced pension based on your husband’s contributions.

The letter referred to an initial pension entitlement in 2014 of just under £15 per week, and gave you a choice of a permanent ‘bonus’ of around £12 per week if you wanted to take a higher regular pension or a one-off lump sum of just over £6,000.

This was clearly wrong as it took no account of your husband reaching pension age during the period of deferral.

When I took up your case with the DWP, it wrote a second letter to you which contained very different information.

They are now quoting you a core pension of £85.75 per week (based largely on your husband’s contributions).

In addition, because you have deferred for eight years, they are now giving you the option of a regular uplift of another £65 per week on top or a lump sum of over £32,000.

Your experiences show how important it is to challenge state pension awards and notifications if you are not sure how they have been worked out or if you suspect there might be an error.

My concern is that if you had not been alert and got in touch, you might have missed out on more than £26,000 of a lump sum which was rightfully yours.

I often wonder how many other people have found dealing with DWP so challenging that they have eventually given up and simply accepted what they are being paid. Your example shows that it is always worth persevering.

A DWP spokesperson said: ‘We are sorry for the incorrect information initially provided to Mrs [name deleted] and have sent her an updated state pension forecast which outlines her entitlement and options for taking her state pension.’