The New State Pension System

[Al R]

Because the new flat rate pension was supposed to help those who traditionally didn’t have independent pension savings, such as (invariably) wives and the self employed.

Interestingly, just the other day, the Work and Pension Committee urged the government not to cut the link between spouses' state pensions and to allow women who are 15 years away from retirement to continue linking their state pension to their husband’s National Insurance Contributions (NICs) when the new scheme starts. Previously, wives relied on a husband’s income, and until 1977 married women who were employed paid reduced NIC (‘married women’s stamp’).

In order to get round having a reduced state pension, women were also entitled to use their husband’s NICs instead of their own. However, the option for a woman to align her pension to a husband’s NICs will be lost and she will now once again, receive the reduced version. There are only around 30,000 women who will be adversely affected by this change but this is the committee statement that I question; ‘Some women did not build up their own NI record because they had an expectation that they would be able to rely on their husband’s contributions to give them entitlement to a basic state pension’.

If the Work and Pension Committee is to successfully dodge the accusation that it is cherry picking the juiciest bits of gender equality, it needs to remember that hundreds of thousands of people in various public sector schemes also ‘had an expectation’. On another note, if you have been affected by the legislation which sees you losing child benefit because you earn too much, it might be worth reading this if you decide to turn down NIC instead of not paying a tax bill.

http://www.hmrc.gov.uk/childbenefit/start/claiming/protect-pension.htm