I am a 74-year-old married woman and receive a reduced state pension because I am a few years short of having a full record.
Between 1978 and 1985 I was at home looking after three children all aged under 16.
I was given credit towards my state pension for four of these years. However, 1978 to 1981 was disallowed because I supposedly paid a married woman’s ‘small stamp’.
State pension: I lost out though I only paid married women’s stamp for one year (Stock image)
My youngest daughter was born in 1979 and I do not believe I worked in these years. When I made enquiries I was told I had three small part-time jobs in 1978 and paid a small stamp.
They did not believe I had any employment between 1980 to 1981 but the system assumed if I had worked I would have paid small stamp – even though I never worked in those two years.
Apparently, I was supposed to crystal ball gaze and tell them (whoever they were) that if I returned to work I would no longer opt for the small stamp.
In reality all my working life from age 16, when in full-time employment or latterly self employed, I paid full National Insurance, apart from in 1978. Can you help in any way?
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Steve Webb replies: When the National Insurance system was created after Second World War, there was a presumption that for many couples there would be a male breadwinner and a wife who was financially dependent upon him, both when of working age and in retirement.
Based on this assumption, those married women who did have paid work were allowed to opt for a lower rate of National Insurance contributions.
This is formally known as making a ‘reduced rate election’, but is more commonly known as paying the ‘married woman’s stamp’.
The deal was that married woman would save money on their NI contributions for those years, but they would build up no state pension in their own right for those years.
In retirement, the assumption was that a married woman would not get a pension in her own right but could get a 60 per cent ‘married woman’s’ basic pension when her husband retired.
This would be based on his record of NI contributions.
By the mid 1970s there were over four million married women paying at the reduced rate.
However, with a much greater focus on equality in the workplace, it seemed increasingly out of place to have a state pension system built around the assumption that millions of women were simply financial dependents of their husband.
Did you miss out on a state pension lump sum if you were widowed?
This is Money’s columnist Steve Webb calls on elderly widows who might have missed out on a backpayment when their husbands died to get in contact.
He wants to help people get money that is rightfully theirs, and find out if there is a systematic problem not picked up in the Government’s massive correction exercise for elderly women who were underpaid.
Find out if you could be affected, and how to contact Steve here.
> Did you miss out on state pension if you were widowed in retirement?
In response to this, legislation was passed in 1975 which meant that no new married woman could opt for the ‘reduced stamp’ from 1978/79 onwards.
However, some women had already been paying a reduced stamp for many years and might actually have gained no benefit from a short period on the full stamp later in their working life. So, it was decided to allow those who were already on the reduced stamp to carry on.
Crucially, the ability to go on paying a reduced stamp post 1978 would lapse if there was a gap of more than two years when they did not pay any NI at all.
After such a gap, a married woman who restarted work would have to go back on the full stamp.
Unfortunately, you seem to have been caught by this rule.
From what you have said it sounds as though you may have done some work at the reduced rate in 1978 (though if you happened to have paperwork from the time with a payslip showing you paid the full rate then you could challenge this).
If so, then your ‘reduced rate election’ would remain live for the following two years unless you actively revoked it.
This meant that, even though you were not working, you were treated as being on the small stamp for 1979/80 and 1980/81.
Any year when you were either paying *or eligible to pay* NI at the reduced stamp is a wipe-out in your NI record, as you have discovered.
In particular, although ‘Home Responsibilities Protection’ (HRP) had just been introduced for those at home with children, it was decided that women on the reduced stamp could not get HRP.
So, although in 1979/80 and 1980/81 you were at home with children and could otherwise have benefited from HRP, you did not because of your ‘live’ election to pay the reduced stamp.
As you say, the only way you could have avoided this would have been to have actively ‘revoked’ your reduced rate election at the end of 1978/79.
Unfortunately, it is now hard to see how any of this can be put right.
The whole ‘married woman’s stamp’ system is one that has caused frustration to large numbers of people over the years and has left many women with reduced pensions as a result.
Ask Steve Webb a pension question
Former Pensions Minister Steve Webb is This Is Money’s Agony Uncle.
He is ready to answer your questions, whether you are still saving, in the process of stopping work, or juggling your finances in retirement.
Steve left the Department of Work and Pensions after the May 2015 election. He is now a partner at actuary and consulting firm Lane Clark & Peacock.
If you would like to ask Steve a question about pensions, please email him at [email protected].
Steve will do his best to reply to your message in a forthcoming column, but he won’t be able to answer everyone or correspond privately with readers. Nothing in his replies constitutes regulated financial advice. Published questions are sometimes edited for brevity or other reasons.
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If Steve is unable to answer your question, you can also contact MoneyHelper, a Government-backed organisation which gives free assistance on pensions to the public. It can be found here and its number is 0800 011 3797.
Steve receives many questions about state pension forecasts and COPE – the Contracted Out Pension Equivalent. If you are writing to Steve on this topic, he responds to a typical reader question about COPE and the state pension here.
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