Thousands of former military wives are missing out on valuable pensions credits simply because they reached state pension age before the rules changed. The new state pension was introduced in April 2016, and it stopped the ability for people to claim a pension based on their spouse’s national insurance contributions. Recognising the impact this could have on partners of people in the military, who often move around, the government introduced credits for military spouses while abroad. But the opportunity to claim is only available to people reaching state pension age after 6 April 2016.
Anyone claiming could be in for a substantial windfall. Spouses, likely to be women, can claim a full-year’s national insurance credit for any year they were abroad since 1975. The compensation for one year is the equivalent of an extra £230 a year in a pension, or £4,600 over the course of an average 20 year retirement. Someone abroad for five years could get a £20,000 boost to their pension. Those who reached the state pension age before April 2016 are instead entitled to a pension that is worth 60 per cent of the value of their husband’s full basic state pension, which is £122.30 a week in this tax year.
Steve Webb, the former pensions minister who is now director of policy at Royal London, said the changes have left some people shortchanged. “What if you had already contributed for (say) 65 per cent of your working life from years when you were in the UK? The ability to claim a 60 per cent pension is therefore useless, but you’ve still got a reduced pension because of your years outside the UK.” Penalised because of age Mr Webb, who has been looking into the issue since the end of last year, said he has received many letters and emails from women who feel they have unfairly lost out. “If we think newly retired women shouldn’t be penalised for time spent outside the UK, it’s hard to see why women who happened to reach pension age before 6 April 2016 should still be penalised. Indeed, you could have two women who were outside the UK at the same time in the same place and one gets credits and the other does not, simply because one is slightly younger than the other,” he said.Case study
Ms Clare McWilliams, aged 71, is only entitled to a state pension of £80 a week. Her husband was in the army for 20 years and they spent four years abroad, living in both Germany and Cyprus. When her husband was made redundant in 1995, the couple spent 12 years teaching in Malaysia. Ms McWilliams says they both made voluntary class 3 national insurance contributions during this time.
Ms McWilliams reached state pension age in 2006, aged 60. Women could previously claim the state pension five years before men, but the qualifying age is now being levelled out. “We moved frequently and it was very difficult for me to hold down a job,” says Ms McWilliams. “When we were in Cyprus in the mid 1980s, wives couldn’t work. But because I reached retirement age before 2016 I can’t claim any credits and it’s too late for me to buy back years.” The Department of Work and Pensions (DWP) said more than 3,700 applications were made for Post-75 Service Spouse Class 3 credits between April 2016 and October 2017. It could not confirm how many of these applications were successful, and HMRC also declined to comment.
What to do now: – If you think you are eligible to claim for military service national insurance credits, visit gov.uk/government/publications/national-insurance-credits-for-partners-of-armed-forces-personnel-overseas-after-6-april-1975. You can still apply if you are now widowed, divorced or have had your civil partnership dissolved provided you were married or in a civil partnership at the time of the accompanied posting.
For information on whether you can apply for other national insurance credits, visit gov.uk/national-insurance-credits/eligibility
Sign up to the government’s personal tax portal to see if you have any gaps in your national insurance record: gov.uk/check-national-insurance-record or call 0300 200 3500. You can buy back some years.
Elizabeth, who was born in 1948 and whose husband was in the Royal Air Force, said it was frowned on for wives to work. “Even throughout the 1980s, women had to live on the base. My husband was a senior officer and as he rose up the ranks I had to take up more duties,” said Elizabeth, who asked to remain anonymous. “I had to look after all the 100 or so families on the base while the men were on tour, and I was expected to be the hostess for VIP guests and run welfare work – all unpaid of course. I lived abroad for six years, and can’t claim credits for when I was away. I don’t receive the full state pension now.”
Changes to the state pension
Under the old pensions system, everyone received a basic state pension and some would qualify for additional state pension. The new state pension, for people retiring after April 2016, is a flat rate of £159.55 a week for people who meet the qualifying criteria of at least 35 years of national insurance contributions. A DWP spokesman said: “We owe our armed forces a great debt of gratitude and provide a range of support through the Armed Forces Covenant including through credits towards the state pension when they have supported their partner overseas. We would encourage anyone who thinks they might be eligible to check online at gov.uk”.