State pension: Some women may get ‘tens of thousands’ in refunds due to little known rule
Martin Lewis discusses state pension underpayments
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State pension payments are set to cost the DWP dearly over the coming months and years, with it being revealed in early March that thousands of women had been underpaid as a result of certain marriage laws. The OBR published it’s economic and fiscal outlook alongside Rishi Sunak’s March Budget which laid out how some women had been under-paid for several years.
The DWP has confirmed this will be amended and refunds will be issued, as the report explained: “DWP has also identified underpayments of state pension relating to entitlements for certain married people, widows and over-80s back to 1992.
“Our forecast reflects an initial estimate that it will cost around £3billion over the six years to 2025-26 to address these underpayments, with costs peaking at £0.7billion in 2021-22.”
These repayments are set to benefit many but as Sky News reported today, thousands of women could be due a “huge windfall” following analysis of a little known rule.
For women who are receiving particularly low pensions of £1 a week, payments equivalent to “lottery wins” could be issued.
Steve Webb, a former Minister for Pensions and partner at Lane Clark & Peacock, highlighted around 5,000 women could be owed thousands of pounds in backdated payments but warned this may be missed by the data searched currently being made by DWP.
Steve explained some women, until very recently, were on pension incomes of only around £1 per week but a little known rule can allow pension back claims to be made to before a 2008 rule change which prevented married women from doing so.
It was estimated the total bill from doing this en masse could top around £250million if all the eligible claims are made.
In helping some people with this already, Steve confirmed he has recently helped one woman receive £56,000 in back payments, with others receiving similar payouts worth several thousand pounds.
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The specific women who will qualify for this concession are those who get no basic state pension, but who are not receiving small amounts of graduated retirement benefit (GRB).
GRB ran from 1961 to 1975 and it made up one of the three elements of the old state pension set up, which also included the basic state pension and an earnings-related pension.
According to Steve’s analysis, eligible recipients can make backdated claims to when their husbands turned 25.
Steve warned affected women are likely to be missed from the DWP’s search efforts and as such, he urged retirees to take action: “It is incredible that there are thousands of women getting such tiny pensions, but even more incredible that many could potentially be entitled to tens of thousands in back payments.
“It is as if they are sitting on unclaimed winning lottery tickets.
“It is very important that women on these very small pensions make contact with the DWP as soon as possible to see if they could be entitled to a windfall.”
Currently, state pension payments are determined by “new” rules introduced in 2016.
Under the new system, people will need to build up at least 10 years of National Insurance contributions to receive an income, with 35 years needed for the “full” amount.
To be eligible for the new state pension, a claimant must have been born on or after April 6 1951 if they’re a man.
For women, they must have been born on or after April 6 1953.
It should be noted state pensions will not be paid automatically even when a person reaches their state pension age, they will need to be claimed.
The quickest way to claim a state pension is by going online but they can also be claimed over the phone or through the post.
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