Are the new state pension rules unfair to women?

Paul Lewis / 01 October 2013 ( 05 April 2016 )

The single-tier state pension was introduced on April 6, 2016, but many women feel that they are getting a poor deal from the new system.

The Government says women are the winners from the new state pension scheme – called the single-tier pension – which is £155.65 a week. But many women claim it actually leaves them worse off. 

The new state pension applies to men born on April 6, 1951 or later and to women born on April 6, 1953 or later. Anyone born before those dates will continue to get a pension under the previous scheme (currently £119.30 a week), increased each year by inflation.

The new pension began on 6 April 2016. Women who were born before April 6, 1953 remain under the previous rules, but many believe they are being discriminated against because men of the same age will get the new pension. 

Another group born later come under the new rules. But some will get less than they would under the old scheme. 

How will the pension changes affect you?

Too old

The new state pension scheme was introduced on April 6, 2016 and the new rules only apply to those who reach pension age on or after that date. For men, the calculation is easy. Their pension age remains 65, so if they were born on April 6, 1951 or later they get the new pension. 

For women the calculation is more complex because women’s state pension age is rising. 

Women born in the month March 6 to April 5, 1953 would have already reached their state pension age on March 6, 2016 (when the new state pension was introduced), so do not come under the new system. Women born on April 6, 1953 or later will reach pension age on July 6, 2016 or later and will get the new single-tier pension. 

This means that women born April 6, 1951 to April 5, 1953 do not get the new pension whereas men born in that period do. 

Many women will lose out

About 700,000 women are in that group and many of them feel very aggrieved. Most of them would do better under the new scheme. If they get the full basic pension of £119.30, they would get more than £36 a week more from the single-tier pension of £155.65 a week.

The Government counters that on average the difference is a lot less, about £6 a week. The average pension paid to this group is around £125 a week under the old system, taking into account any additional earnings-related pensions they may be due. 

It also says that the new pension is often less than £155.65 a week, because many of the women who fall under the new rules do not have a full National Insurance (NI) contribution record. 

Although the older women got their pension earlier than a man of the same age, who will have to wait until he is 65, campaigners say many women could be £35,000 worse off over their lifetimes by being denied the new pension. The Government argues that nine out of ten women will get more from their pensions during those extra years than the loss from their lower weekly pensions continuing under the old rules.

But that still leaves 70,000 women worse off. 

Are you one of the women disadvantaged by the pension changes?

Too young

Some women who get the new single-tier pension because they were born on or after April 6, 1953 are also angry. They will miss out on rights to a pension based on their husband’s contributions. 

Under the old scheme, a married woman is entitled to a basic state pension based on her husband’s contributions. Known as a ‘Category B’ pension, this married woman’s pension is about 60% of the full pension – £69.50 in 2014/15. If a woman has earned a pension from her own full NI contributions, she will get whichever is the higher. 

A widow or divorcée can get a full pension on her late or ex-husband’s contributions if she’s not remarried before pension age. A woman born before April 6, 1953 will still be able to claim a wife’s or widow’s pension on her husband’s contributions, even if his date of birth puts him in the new scheme, but not if she’s born on or after that date. 

Women penalised for not working

Under the new scheme, women who have not worked very much or paid many – or indeed any – full rate NI contributions will not get a pension of their own and neither will they get a pension as a wife or widow. 

Others who have paid some contributions may get a small pension of their own. But it may be far less than the wife’s or widow’s pension they could have got if they had reached pension age under the old scheme. They may have to claim means-tested benefits.

Married men and civil partners have similar rights to married women under the old scheme but they have no rights to benefit from their wife’s or partner’s contributions if they come under the single-tier pension. 

Could deferring your state pension boost your income?

Married woman’s stamp

There is one exception to the general rule that the married woman’s pension will not be paid to women born on April 6, 1953 or later. A woman who paid the reduced-rate married woman’s NI contributions will keep some rights to a wife’s or widow’s pension. To qualify she must have had the right to pay the reduced contributions at some point within the 35 years before she reaches pension age. 

Complex transitional rules will ensure these women are given a ‘safeguard’ amount that is equal to the £69.50 married woman’s pension or £119.30 for a widow or divorcée as part of the calculation of their entitlement under the new scheme. 

Check your NI record

Three groups of women who come under either scheme should check their National Insurance record carefully. Women who stayed at home to bring up children should have had National Insurance credits given to them for each week they claimed child benefit. 

Prior to 2010, they were called Home Responsibilities Protection, and they became NI credits in 2010. If at any point they had the right to pay the reduced-rate married woman’s NI contributions, these credits would have started only after two whole tax years had been spent out of the labour market. But they may not have been applied correctly. 

Some women may have spent time caring for another person. They could have got NI credits for those years if they spent at least 35 hours a week caring and the disabled person received certain benefits. If they did not get those credits they can still be claimed for years between April 1978 and 2002 and after April 2010. They cannot be claimed for years between April 2002 and April 2010.

Foster parents can get NI credits based on Home Responsibilities Protection for the years from 2003. Most will have had them applied in 2010. If not, they can still apply for them themselves. 

Can you top-up your state pension?

The opinions expressed are those of the author and are not held by Saga unless specifically stated.

The material is for general information only and does not constitute investment, tax, legal, medical or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.