A jubilee year for the state pension?


This article is the last part of the FT’s Financial Education and Inclusion Campaign

If you’re one of the more than 12.5 million people in Britain who receive the state pension, there are two reasons to celebrate this holiday.

Last week, the Chancellor confirmed that the ‘triple lockdown’ would be reinstated next April, based on September inflation figures, which could put state pension payments on track for a 10% increase in 2023.

Want to party ? Most retirees will receive their June payment a few days early to ensure they receive the money before the Platinum Jubilee celebrations.

The state pension has been with us a little longer than Queen Elizabeth II on the throne, but its recent history is far from ‘happy and glorious’ – especially when it comes to women.


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The new state pension was introduced in 2016. Those entitled to the full amount receive just over £185 a week, which could rise to over £203 next spring – but you need 35 years of contributions to national insurance.

Family responsibilities mean women are particularly likely to have gaps in their records, and therefore a lower state pension. The vast majority of those receiving £100 or less a week are women.

The Queen continued to serve until she was 90, but equalizing the state retirement age left many women born in the decade of her coronation working much longer than they were supposed to. had planned it.

If you’re seeing friends and family over the long holiday, here are some gems to pass on that could help women of all ages reign supreme in their retirement.

70 year old women

The more relevant question is: are you getting what you owe from the state pension? Last year the Department for Work and Pensions estimated it had underpaid 134,000 (mostly women) pensioners by up to £1billion, with some errors dating back to 1985.

The worst case revealed so far is of a woman who owed £128,000, although underpayments of several thousand pounds are more common.

Widows, divorcees and women who rely on historical contributions from their husbands for part of their rights are most likely to receive compensation.

The DWP is slowly checking the records of those who started claiming the state pension before April 2016, although completion is not expected until the end of 2023.

The DWP said: ‘We are contacting everyone affected to make sure they receive all that is due to them. When errors occur, we are committed to correcting them.

Lady Ros Altmann, former Minister for Pensions, does not think it is acceptable for women to have to wait. “If women are looking to see if they have the right amount, they can be very needy and should, in my opinion, be high on the priority list,” she says.

Another scandal? The approximately 850,000 low-income retirees who qualify for a pension credit but do not claim it.

Owning your own home or continuing to work after the statutory retirement age will not prevent you from applying, provided your income and savings are below certain limits.

Even if you are only entitled to a small amount, people on pension credit are also entitled to the government’s £650 cost of living payment and the £150 hot house discount – as well as those over 75 get a free TV license.

The government has launched an awareness campaign and it is easy to check online. You could offer to help older, less tech-savvy parents do this during the double holiday.

Women in their 60s

Although many women born in the 1950s did not expect to wait until age 66 to receive their state pension, those in good health could increase the value of their payments by deferring them.

Currently, your entitlement will increase by just under 5.8% for each year of deferral, although this may not make sense to everyone.

A few months before your 66th birthday, expect a letter from the DWP confirming the date and amount of your first state pension payment and respond promptly if additional information is requested.

Last year, some newly created pensioners experienced delays of up to six weeks before their first payment arrived. The DWP says the backlog has been cleared, but emails from some FT Money readers suggest otherwise. If you have any issues, email us via [email protected]

Women in their fifties

Anyone aged 50 and over can book an appointment with a Pension Wise adviser, the government’s free and impartial guidance service.

New laws are now in effect requiring defined contribution pension plans to give members a much stronger “push” to use this service.

Although your mind may be focused on what you can get out of your pension, for many women in their 50s the opposite urge should apply.

“A lot of times the best advice would be to keep contributing to a pension and take advantage of the free money and huge tax benefits that pensions offer,” says Altmann.

You should also check if there are any gaps in your national insurance record and think about how to fix them.

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“Buying” additional years of contribution can be very advantageous, as voluntary national insurance rates are subsidized by the government. However, some years will not count towards a higher public pension.

It’s a horribly complicated problem. Former pensions minister Sir Steve Webb is designing a website to make it easier for people to understand their options. DWP’s Future Pension Center can also help.

If you are a grandparent or a family member caring for children under 12, you may be eligible for National Insurance credits through the child benefit system (and these may be backdated).

Women in their thirties and forties

Hundreds of thousands of stay-at-home parents have affected the value of their future state pensions by not registering for Child Benefit. Even if you or your partner earn too much to receive a monetary benefit, you must register for National Insurance credits for your future state pension. Make sure the claim is in the name of the parent who needs it for their case.

If you’re expecting a baby, finding the money to fund pension contributions during your final months of maternity leave may not be a priority. More and more couples are budgeting for this, but any help would also make a fantastic “baby shower” gift for an older relative (this went down really well in our family).

young women

After seeing all the pitfalls above, I would advise women in their twenties to start an employer pension as soon as they can and pay as much as they can afford (most employers have a sliding scale equivalent contributions).

Some employers are much more generous than others – asking for details is a great question at the end of a job interview.

You don’t have to wait for your first job to start your first pension. Increasingly, grandparents are setting up junior Sipps or stakeholder pensions for their grandchildren to provide a legacy for decades to come.

As long as they are non-taxpayers, you can save up to £2,880 a year in baby and child pension, increased to £3,600 with tax relief.

Considering the size of the gender pension gap, it really benefits women to know these tips. I hope they give your family a chance to celebrate for years to come.

Claer Barrett is the FT’s consumer editor: [email protected]; Twitter @Claerb; instagram @Claerb


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