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Last Updated: Friday, 8 February 2008, 16:55 GMT
Top twenty pension questions
Malcolm Mclean
The Pensions Advisory Service chief executive, Malcolm Mclean
The Pensions Advisory Service (TPAS) has recently relaunched a special helpline to advise women about their retirement options. Initially it will be available until 14 March 2008, but may be extended.

The helpline for women is
0845 600 0806. Lines are open Monday to Friday from 9am until 5pm.

The standard TPAS helpline is 0845 601 2923. Lines are open Monday to Friday from 9am until 5pm.


Here TPAS chief executive Malcolm Mclean answers some of the most common questions asked by callers since the launch.

1. I have heard that state pension ages for women are changing. What are the changes and when do they come in?

State pension age for women, currently 60, will be moved back gradually to bring it in line with men at 65 during the next decade starting from 6 April 2010. The revised age depends on your date of birth. If you were born before 6 April 1950, then you will still be able to get your state pension at 60.

If you were born between 6 April 1950 and 5 April 1955, you state pension will be paid to you at a set date, which will be between your 60th and 65th birthdays.

If you were born on or after 6 April 1955 your state pension age will be the same as that for a man, i.e. currently 65.

State pension ages for both men and women will then move on one year per decade between 2024 and 2046, so that by then (2046) the state pension age for men and women will be 68.

To find out precisely what age and date applies in your case we recommend you try our easy to use state pension age calculator on our website:

2. I understand the qualifying conditions are being made easier so that more women can get the full basic state pension. How will this work?

Entitlement to the basic state pension depends, amongst other things, on the payment of full rate national insurance (NI) contributions over a large proportion of your working life.

Changes which it is anticipated will be of particular benefit to women will come into force on 6 April 2010

To qualify for the full state pension -currently 87.30 a week - those women who reach state pension age before 6 April 2010 are required to have 39 NI qualifying years - although this can be reduced to as little as 20 if they have spent years at home since 1978 bringing up children or caring for ill or severely disabled people.

For those reaching state pension age on or after 6 April 2010 the maximum requirement for a full basic pension is reduced to 30 years. This applies to both men and women.

It should be emphasised that this change is not retrospective and the reduction to 30 years will not apply to anyone who has already reached state pension age before 6 April 2010.

3. Do you actually have to retire from work to start drawing the state pension?

No - it is your age that matters. It is irrelevant whether you are continuing in work or not.

4. If I stay on at work beyond 60 and delay claiming my state pension until after 6 April 2010 will it be my age or the date I actually finish work that will determine whether the 39 or the 30 year rule applies to me?

Your national insurance contribution requirement depends on the date you reach your state pension age, not the date you finish work.

5. I paid the married women's stamp when I worked - will I get any state pension?

Not in respect of the period for which you paid the reduced stamp. You may become entitled to a state pension in respect of periods for which you were paying the full stamp.

If you are still married you may also become entitled to a reduced state pension by virtue of your husband's NI contributions.

You can get 60% of his basic pension but only from the date he reaches his state pension age and starts to draw his pension.

There is a slight change to this from 6 April 2010 when the requirement for the husband to be actually drawing his pension will no longer apply.

The 60% pension is not in addition to anything you may be entitled to in your own right. It is instead of it.

6. What exactly is Home Responsibilities Protection (HRP) and will it continue after 6 April 2010?

The number of qualifying years required to build up the basic state pension can be reduced to as little as 20 years for those with caring responsibilities or for those bringing up children. This is known as Home Responsibilities Protection (HRP). From 6 April 2010 the current HRP will be replaced by a new weekly NI credit for those bringing up children up to the age of 12 and for those who spend at least 20 hours a week caring for severely disabled people. Years before 6 April 2010 covered by HRP will be converted into years of credit. Credits have the effect of treating you as having paid a qualifying NI contribution.

7. Do I still have to pay national insurance contributions once I have accumulated the necessary 30 qualifying years after 2010?

Unfortunately, yes - if you are in work and earning above the minimum prescribed amount it is a requirement that both you and your employer pay national insurance. It should perhaps be mentioned that your NI contributions do not only pay for the state pension, but also cover you for other short-term benefits (such as jobseekers allowance and incapacity benefit) and bereavement benefits.

8. Is there any limit as to the number of voluntary national insurance contributions I can make and if so what is it?

The normal time limit for making good missing national insurance contributions is 6 tax years from the end of the tax year in which the missing contributions were due. However, for the years 1996/97 to 2001/02 a special concession has been made following some failings by the then Inland Revenue to issue notices at the end of the relevant tax years to people who had paid some contribution but not enough. In respect of those years only, the option of paying voluntary contributions has been extended to 5 April 2009 for those who reach state pension age on or after 24 October 2004. For those who have already reached state pension age before 24 October 2004 they have until 5 April 2010 to make good the missing contributions.

9. I am a woman in my early sixties drawing a pension of only 30% of the full rate. Is it possible at this stage to pay voluntary national insurance contributions to improve the rate and if so will the increase be backdated to my 60th birthday?

As explained in the previous question and answer, it is possible at the present time to pay voluntary contributions back to 1996/97. But this can only be done of course if the years in question were prior to the year in which your 60th birthday fell and you had not already paid a full contribution for those years. Additionally you cannot pay for a year in which your liability was at the married women's reduced rate.

Subject to those restrictions, if you can pay, it is worth considering whether it would be in your financial interests to do so. If you have been drawing your pension since age 60 the increase in the rate would normally be backdated to your 60th birthday and this could result in a sum of money which actually exceeds the amount of backdated voluntary contributions you have to make. If you reached state pension age before a specified date (24 October 2004) it may not even be necessary to actually pay the contributions as the cost of these would be offset against the arrears of extra pension which would otherwise be due. If you reached state pension age after this date you will have to pay the voluntary contributions up front and then receive the arrears due in full.

10. I am a 55 year old woman not working at present but paying voluntary national insurance. Should I stop the payments now?

This will depend on your current national insurance contribution record and whether payment of these voluntary contributions will be necessary, bearing in mind that for you, the 30-year requirement will apply. If you don't already have details of your record it is probably worth having a word with the National Insurance Contributions Office to try and establish your exact position.

11. When does the Government intend to restore the link with earnings on the annual increases made to the state pension?

The Government's stated objective is, 'subject to affordability and the fiscal position,' to increase the basic state pension in line with earnings from 2012, but in any event by the end of the next Parliament at the latest. This probably means that the restoration of the earnings link will be made sometime between 2012 and 2015.

12. I stay at home to bring up my family so I intend to rely on my husband's pension provision for myself as well. What would happen if he died before retiring?

If your husband is a member of an occupational pension scheme the benefits payable will depend on the scheme rules. Often this type of scheme provides a tax free lump sum and a widow's pension. Some schemes also provide pensions for children below a certain age.

If your husband is a member of an occupational money purchase scheme or a personal pension arrangement, there may be death benefits similar to that detailed above but, most likely, the only benefit payable will be the value of the fund he has saved to the date of his death.

In respect of state benefits there are three benefits, one or more of which could be payable. These are Bereavement Payment, Bereavement Allowance and Widow Parents Allowance.

The Bereavement Payment is a lump sum payment of up to 2000, normally tax-free.

Bereavement Allowance is a series of taxable weekly payments (currently up to 87.30) for up to 52 weeks.

Widowed Parents Allowance is a taxable benefit (currently up to 87.30 per week) for those who have a qualifying child for whom they are entitled to receive Child Benefit.

You would only be entitled to either Bereavement Allowance or Widowed Parents Allowance but either can be paid in addition to Bereavement Payment.

For further details you can refer to he Pensions Advisory Service website and our section on State Pensions:

13. My husband and I are both drawing our state pensions. What will happen to my state pension if my husband dies before me?

The amount of your basic state pension would normally increase to the level he was receiving, if this was higher.

You may also be entitled to claim a share of his additional pension (formerly SERPS now called State Second Pension). The exact amount will depend on his date of birth and will be between 50%-100% of the amount he was receiving.

14. I am divorced and under my state pension age. Will my ex-husband's national insurance record help me? Will this still be the case if I re-marry before my state pension age?

For the purpose of claiming a state pension you can have your former spouse's record of national insurance contributions substituted for your own, either for:

  • all the tax years in your working life up to the end of the tax year in which your marriage ended, or the end of the tax year before the one in which you reach state pension age, whichever comes first.

    or

  • all the tax years in your working life from the beginning of the one in which you married your former spouse up to the end of the one in which your marriage ended, or before the one in which you reach state pension age, whichever comes first.

    None of this applies if you remarry before you reach your state pension age. Instead you will, if necessary, be able to claim 60% of your new husband's basic state pension when he reaches his state pension age.

    15. Is a private pension plan the only way to make additional provision for retirement planning? What about ISAs or property, for example?

    There are, of course, many different ways to save. Individual Savings Accounts (ISAs) or property are two possible options. ISAs allow money invested to grow tax-free and provide easy access to your capital but bear in mind that values can fluctuate and may go down. Putting money into property as a second home or a buy-to-let has generally proved to be a profitable investment for many people in recent years but there are downsides and no guarantees, particularly in the present financial climate, that will continue to be the case. Professional financial advice should invariably be sought in formulating your plans in this area.

    The big attraction of a pension is the tax relief that is given at your highest personal rate. With a company scheme your employer will also be contributing money on your behalf into your pension plan and not joining such a scheme when you have the option to do so is tantamount to turning money away.

    For a married woman building up a private pension in your own right means you may not be quite so dependant on your husband in later life. Also the restrictions that the pension rules impose on when and how you can access the benefits can help with the discipline of saving for your eventual retirement.

    16. I was a member of a pension scheme when I was younger. How can I find out whether I have any benefits to come from this? To get details of an old pension scheme the first place to try is the Pension Tracing Service. They are a Government department that holds a register of pension schemes and their addresses.

    They can be contacted on 0845 600 2537 or via their website:

    They should hopefully be able to supply an up-to-date address.

    If they can't or you write to the address supplied without success then please contact the Pensions Advisory Service as we may be able to make other suggestions to help.

    17. How much should I save if I want to plan for a comfortable retirement?

    There is no hard and fast answer to this. It is often useful to start by asking "How much will I need to save in a pension plan to provide the sort of retirement I want to enjoy?"

    However it can sometimes help to think in terms of replacing a percentage of the income you enjoy now. Several studies have suggested a rough guideline of a half to two thirds of your income may be enough to meet most people's expectations.

    To achieve this you need to put away a certain percentage of your income now. As a rule of thumb we would suggest a rough starting point would be about half your age as a percentage of your income.

    So for example at age 30, that would mean 15% of your income. If you cannot afford that much, any lower amount would be useful as a start.

    18. I am single, over 60 and only have a small pension. Is there a top-up pension I can claim?

    Pension Credit is a mean tested benefit, that can be claimed by people aged 60 or above living in Great Britain. Pension Credit guarantees recipients in this age bracket an income of at least:

  • 119.05 a week if you are single
  • 181.70 a week if you have a partner

    Also, if you or your partner are 65 or over you may be rewarded for saving for your retirement, up to:

  • 19.05 if you are single
  • 25.26 a week if you have a partner

    For further details about the Pension Credit you can refer to the Pension Service website:

    19. I am divorcing my husband. Am I entitled to a share of his pension scheme? If you are going through a divorce and you and your ex-spouse are looking at dividing up your assets, the Court is required to take the pension benefits of both of you into account.

    Through the Court, a divorcing couple can choose to:

  • balance the pension rights against another asset, such as the matrimonial home (this is known as Pension Offsetting); or
  • arrange that when one party's pension eventually comes into payment, a portion of it will be paid to the other party (this is known as Pension Earmarking); or
  • split the pension at the time of the divorce to give both parties their own pension pot for the future (this is known as Pension Sharing).

    Pension Sharing is a popular way of dealing with the pension benefits as it helps with the 'clean break' intention of the divorce procedure.

    20. What does my employer need to do with regard to my works pension scheme during my period of Maternity Leave?

    For any period of paid statutory maternity leave you must be retained in the pension scheme and treated as if you were in normal work.

    If it is a defined benefits scheme any benefits payable are based on the salary you would have received had you not gone on maternity leave (this includes any Death in Service benefit).

    If the scheme is a defined contribution scheme your employer must pay a contribution based on the salary you would have received had you not gone on maternity leave. This includes the right to any pay increase that would have occurred.

    For both types of schemes your contributions are based on the level of pay you are actually receiving.

    Any unpaid maternity leave (i.e. additional maternity leave) which follows a period of paid maternity leave does not count as pensionable service. So, the employer does not need to make payments to cover this period. However, many employers do go beyond the minimum requirement.

    Please note that the above is a guide for information only. You should always seek advice relevant to your own individual circumstances. The Pensions Advisory Service cannot be held responsible in law for any opinion expressed, nor should any such opinion be regarded as grounds for legal action.


    The opinions expressed are those of the author and are not held by the BBC unless specifically stated. The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.



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    SEE ALSO
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