‘I’m not getting full state pension even with 48 years of NI contributions’

A woman has been left confused after receiving £7 less in state pension than her husband, despite having 48 years of national insurance contributions.

Judith was born in August 1953 and has been in receipt of her state pension since October 2017.

The 70-year-old is receiving £196.82 per week of state pension, whereas her husband, who is younger than her, is receiving the full £203.85 per week.

With reports circulating about women missing out on thousands of pounds in state pensions due to mistakes by the Department for Work and Pensions, she was alarmed thinking she had missed out on some of her money.

She said: “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.”

Individuals need at least 10 years of National Insurance contributions (NICs) to qualify for the new state pension and 35 years to receive the full amount.‌

Experts at Telegraph Money were able to help Judith with her query and explain why she may have been receiving less in state pension despite having enough National Insurance contribution credits.

After doing research, she found that there were mistakes made regarding contributions in respect of child benefit received by women between (approximately) 1985 and 2010. However, she did not receive a letter about a refund.

Becky O’Connor, director of public affairs for PensionBee responded to Judith’s plea explaining there may be several reasons why she is getting less than her husband.

As Judith has been in receipt of her state pension for six years, it means she started claiming state pension at age 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 April 5, 1950, and increased again from 65 to 66 between 2018 and 2020. 

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Although Judith said she has paid contributions for  48 years, once someone reaches 35 years – enough to qualify for the full amount – the number of years they’ve actually worked doesn’t make any difference. 

Receiving £196.82 per week, Judith is receiving about 3.5percent less than her husband earning over £200.

One possibility Ms O’Connor gave is that for some years, Judith may have paid a married woman’s reduced rate election, which was also known as the “small stamp” and was contracted out this way. In this case, payslips would show the letter ‘E’. 

The reduced rate of national insurance paid by women choosing this option was 5.85percent contributions, rather than 12percent.

This option was abolished in 1977, when these women were 24. So, if she was married at that time, this could account for why her pension is now slightly lower. 

Additionally the mistakes made by the Department for Work and Pensions affected thousands of women in the UK. However, Ms O’Connor suggested she may have been contracted out at some point during her working life.

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. 

Ms O’Connor said: “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.”

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