A new pension scandal has seen married women miss out on thousands of pounds they were entitled to in retirement.
One widow has now won back more than £100,000 after it emerged government blunders have denied some women a better-paying state pension for years.
Former pensions minister Steve Webb revealed in analysis on Saturday that around 130,000 women may have been short-changed to the tune of £100 million in total.
Missing out: Around 130,000 women may have been short-changed to the tune of £100m in total
Campaigners are now calling for the Department for Work and Pensions (DWP) to conduct a full investigation into how many women have missed out and how it was allowed to happen.
Some women have even won backdated pension payments worth tens of thousands of pounds — despite initial assurances from the DWP that they were getting the income to which they were entitled.
Mr Webb, a partner at pension consultancy Lane Clark & Peacock, says more than 24,000 people have now used an online calculator he created to determine whether or not they could be owed money. And of those, close to 1,500 had indicated they could be being underpaid.
The scandal was first unearthed by This Is Money, the Mail’s financial website, after a reader wrote to Mr Webb when his wife found out she had been underpaid for 13 years.
Mr Webb is now calling on the Government to act. He says: ‘We have had a huge response from people wanting to check if this issue applies to them.
But it should not be down to us or campaigning newspapers to get people the right amount of state pension. The ball is now in the Government’s court.
‘We have presented the evidence of a serious problem. They should now use their records to check for any woman who could be getting a higher pension and put things right as a matter of urgency.’
Meanwhile, writing in Money Mail today, Baroness Altmann, another former pensions minister, also demands an inquiry.
She says: ‘It appears some women have slipped through the net, but we don’t know how many and we don’t know why — which is deeply troubling. We need to know what has gone wrong.’
Grandmother lost out on £9k
Underpaid: Jean Hayes, 75, should have had her pension increased from £60.72 a week to £77.45 when her husband Richard, 77, retired in 2008
Jean Hayes, 75, should have had her pension increased from £60.72 a week to £77.45 when her husband Richard, 77, retired in 2008.
Her family were suspicious she was not getting enough but she says the DWP had reassured them she was getting the correct amount.
Yet mother-of-two Mrs Hayes, who lives near Andover, Hampshire, has now received £8,822.41 after the department eventually admitted it had been paying her a lower rate for 12 years.
The retired retail worker says: ‘I am pleased I have got it back at last, but I am cross because I could have used that money over the years.
‘It would have made a difference. I could have gone on better holidays. Now I might be too old.’
Are you entitled to a bigger pension?
Married, widowed or divorced women who did not pay enough contributions to get the full state pension are entitled a rate based on their husband’s record.
The rule applies to those who retired before April 2016 and, therefore, collect the basic state pension.
The boost dates back to an era when wives were typically financially dependent on their husbands and did not pay enough National Insurance (NI) contributions to earn a full pension in their own right.
These married women may have stopped work to bring up children, or paid reduced NI contributions. It means married women are entitled to 60 per cent of the amount of their husbands’ basic pension.
So if your husband receives a full basic state pension, which is now £134.25 a week, then you should be receiving the married woman’s rate of at least £80.45 a week. If not, you could be one of those affected.
Wives are not typically entitled to claim a rate based on any additional state pension their husband is paid on top.
Mr Webb’s analysis of government figures has revealed around 130,000 married women might be being underpaid because they are not receiving 60 pc of basic state pension.
A married woman can only begin claiming the increased rate from when her husband begins to collect his state pension.
To receive a full basic state pension under the old system, you need to have up to 44 years of NI contributions.
A report by the Pensions Commission found that in the early 2000s, 85 per cent of men aged 65 to 69 were collecting the full state pension — compared with just 31 per cent of women.
Women only get a pension based on their husband’s NI record if their own contributions do not entitle them to more than the married woman’s rate.
If their husband retired before March 17, 2008, women had to claim the increased income themselves.
If they did not make a claim, they can do so now to receive the rate going forward. But they can only receive payments backdated for a year.
For women whose husbands reached state pension age after March 17, 2008, the upgraded payments should have been applied automatically by the DWP. If not, they are entitled to receive all payments backdated.
The married woman’s rate can also not be claimed if the retiree has moved to a country such as Australia, Canada, New Zealand or South Africa, where their state pension is frozen.
Expat was forced to fight for £6k refund
Pay out: Glenis Madden, 72, queried the size of her £66.24-a-week pension
Glenis Madden, 72, first phoned the DWP to query the size of her £66.24-a-week pension in November.
And after a long wait, she was assured it was correct in February.
Yet the former accountancy administrator, who retired to Spain with husband Michael, 67, has now received close to £6,000 after the department took another look.
The mother-of-two, who lived in Cheshire before moving to the Costa Blanca nine years ago, says: ‘I was absolutely furious. I couldn’t believe that a government department could have lied to me and kept me waiting.’
She adds: ‘I am very shocked that there could be so many people in the same situation.’
Widows owed same pay as husband
Widows can be entitled to an even higher rate of 100 per cent of their late husband’s basic pension under the old state pension system.
This is because the rules allow them to use their late husband’s NI contributions for their own pension.
So, if a woman’s husband was collecting the full basic weekly rate of £134.25 when he died, her pension should have been automatically increased to that rate.
But Mr Webb estimates that tens of thousands of widows could be receiving less than even the married woman’s rate.
He adds: ‘It would be a cause of particular concern if elderly widows were getting by on such small state pensions. This issue should be investigated as a matter of urgency.’
Divorcees could be due, too
It is also feared that divorced women could have missed out on extra state pension cash; they, too, can claim a full pension based on their ex-husband’s work records.
When a woman reaches state pension age, she can claim a state pension from her ex-husband’s NI contribution record up to the date they divorced.
Divorcees may be entitled to claim the full basic state pension rate of £134.25 a week; more than the £80.45 married woman’s rate.
If a woman has divorced for a second time after remarrying, it is the NI record of her most recent former husband that applies. But, again, Mr Webb’s analysis found that tens of thousands of divorced women were likely receiving less than the married woman’s rate.
96-year-old deprived of £117k over 20 years
Rosemary Chattell’s family say they had queried her £77-a-week pension before
A 96-year-old widow has received more than £117,000 after it emerged she was not paid enough state pension for 20 years.
Rosemary Chattell’s family say they had queried her £77-a-week pension before, only to be repeatedly told by DWP officials that she was getting the correct amount.
Rosemary lives in a care home in Cheshire and suffers from dementia. Her son John, 66, who has power of attorney for her, queried his mother’s pension, but says he was fobbed off three times by the DWP.
John, a retired sales manager, says it was only on the fourth call that someone agreed to investigate for him.
They later called back to say his mother was owed £107,852.58. The DWP also later added interest of £9,447.20.
Rosemary’s pension should have been increased automatically after her husband Roy died at the age of 76.
John says: ‘It’s an injustice. How many other people are there like us? There’s got to be thousands. Without making a call, you never find out.’
A DWP spokesman says: ‘We are very sorry that Mrs Chattell’s state pension review was not processed correctly. We have amended this, paid the arrears owed with interest and apologise unreservedly.’
Over-80s should get £80 each week
Pension rules mean that once someone turns 80, they should receive 60 pc of the full basic rate. This is irrespective of marital status and their NI contribution record.
Those turning 80 should automatically receive the ‘Category D’ pension rate of £80.45 a week as long as they have lived in England, Scotland, Wales or a European Economic Area country for ten of the past 20 years.
Are you being underpaid state pension? How to check
Steve Webb’s firm LCP has launched an online tool to help older married women work out if they are being paid correctly. Find out more here.
But Webb stresses that the website is simply designed as a useful tool, and anyone with any doubt about the amount of pension they are receiving should contact the Department for Work and Pensions. It’s details are here.
It means most women over the age of 80 should receive at least the married woman’s rate.
But there could be tens of thousands of women over 80 not receiving that amount. The scandal comes after women born in the 1950s have been made to wait up to six more years for their state pension after the Government raised the qualifying age from 60 to 66.
A DWP spokesman says: ‘In a number of cases individuals have been underpaid state pension. We corrected our records and reimbursed those affected as soon as errors were identified.
‘We are checking for further cases. If any are found, awards will be reviewed and any arrears paid.’
If it looks as if you have been underpaid, call the Department for Work & Pensions on 0800 731 0469 or visit gov.uk/contact-pension-service.
Are you a married, widowed or divorced woman who has not received the right state pension? See the box above to find Steve Webb’s online checking tool, and go here to find out what to tell us at email@example.com.
Yet another blow for women on pensions
By Baroness Altmann
Call for action: Baroness Altmann
Older women in Britain grew up with the post-war state and private pension systems that assumed most women would rely on their husband’s pension in later life.
Married women paid lower National Insurance contributions, and some employer pension schemes did not allow married women to participate.
But with the lowest state pension in the developed world, British women need every penny.
And that’s why these latest revelations are particularly disturbing.
How many married, widowed and divorced women have been short-changed? We don’t know — and, apparently, neither does the DWP.
Women phoning the Department for Work & Pensions because they suspected their payment was too low were reassured the amount they were receiving was correct.
But it wasn’t. With such a complex pension system, they could not be sure of all the rules. Of course, errors are bound to occur.
But, once discovered, they must be quickly investigated and rectified, with a proper explanation of what went wrong. I hope this will happen as soon as possible.
Pensions aim to help older citizens escape poverty — with the oldest and poorest pensioners being women.
Much more must be done to provide for female pensioners properly, rather than them continually losing out in many different ways.
How many have been underpaid state pensions?
A This is Money investigation revealed a string of women who have been underpaid their state pension, but are they just the tip of an iceberg?
Our pensions agony uncle Steve Webb and pension and investing editor Tanya Jefferies join Simon Lambert and Georgie Frost to tell the stories of the women paid thousands less in state pension over the years than they should have been – and discuss their probe.
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