‘I’m 70, and my husband’s weekly state pension is £7 more than mine – am I being underpaid?’

Write to Pensions Doctor with your pension problem: pensionsdoctor@telegraph.co.uk. Columns are published weekly

Dear Becky,

I was born in August 1953 and have been in receipt of my state pension since October 2017. My National Insurance record shows that I have paid full contributions for 48 years with no gaps. It has come to my attention that I am receiving £7 a week less than I should be. My husband, who is younger than me, has just started receiving his state pension and is getting the full amount of £203.85 per week, whereas I am only getting £196.82 per week.

I read a couple of articles a few months ago saying that there were mistakes made regarding contributions in respect of child benefit received by women between (approximately) 1985 and 2010. I fall into this category. Apparently letters were going to be sent out to women affected by this, but I have not received anything yet. I wrote to the pensions department in April and got no response. I subsequently rang them about three months later only to be informed that I am getting the right amount. How can this be?

I am also in receipt of a small bank pension, and the person at the pension department said it was something to do with this, although I did not really understand what she meant. Something about being “contracted out”. However, my husband also has two bank pensions, one of which is the same scheme as mine – and yet he is getting the full state pension.

I would be most grateful for any help or suggestions you can give me.

Kind regards,

Judith

Dear Judith,

You are now 70, and have been in receipt of your state pension for six years, so you started claiming it aged 63, during the phasing in of the higher state pension age for women. It increased from 60 to 65 between 2010 and 2018 for women born on or after 6 April 1950, and increased again from 65 to 66 between 2018 and 2020. 

Although you say you have paid in for 48 years, once you reach 35 years – enough to qualify for the full amount – the number of years you’ve actually worked doesn’t make any difference. 

Your husband is receiving the full amount of the new state pension. At £196.82 per week, you are receiving about 3.5pc less.

The mistakes made by the Department for Work and Pensions affected a large number of women, and you did the right thing by checking and then following up. However, it sounds as though the person at the pension department for the bank who said something about “contracting out” may be correct.

Contracting out refers to a practice that used to happen before 2016, whereby some employees could opt out of paying some National Insurance and instead earned more benefits through a workplace pension. This was the done thing in the public sector, but was also common among larger private sector companies, including banks. 

If you opted to contract out, then this could have affected your state pension entitlement by reducing your National Insurance contributions – although the basic premise was that you would end up with a higher private pension instead. As your husband gets the full amount, he likely didn’t opt to contract out. 

Many people contracted out without realising. If you have any old payslips – which, admittedly, might be a long shot – and on them are the letters D, E, L, N or O, then you were contracted out. A letter ‘A’ means not contracted out.

It’s also possible that for some years you may have paid a married woman’s reduced rate election, which was also known as the “small stamp” and were contracted out this way. In this case, payslips would show the letter ‘E’. 

The reduced rate of NI paid by women choosing this option was 5.85pc contributions, rather than 12pc. This option was abolished in 1977, when you were 24. So, if you were married at that time, this could also account for why your pension is now slightly lower. 

Last week’s Pensions Doctor was: ‘I’m 67 and self-employed – is it too late to start a private pension?’

The best of your comments:

Dean Roberts

You can’t live forever. Take the money and enjoy it now... tomorrow’s might never come...

Ronald Barnes

So many other things to consider, married, children, lifestyle choices, charitable gifts. Keep working if you enjoy doing so or retire if you don’t. You are going to be pretty comfortable whatever you choose.

Mark Denton

Take the teacher pension now and pay current earnings into a pension scheme to manage the tax liability.