News story

3rd September 2002

£8 Billion Women's Pension Rip Off

Steve Webb MP, Liberal Democrat Shadow Work and Pensions Secretary, today revealed that millions of married women have little or no state pension rights despite having paid £8billion in National Insurance contributions.

The figures compiled by the independent House of Commons library reveal that at least 4.5 million women, of whom 1.5 million are still of working age are affected by the scandal.

Steve Webb MP, said:

“It is unacceptable that over 4 million women who thought they were saving for the future have little or no state pension rights despite paying £8billion in National Insurance contributions.

“We see cases of women paying pension contributions for over thirty years but receiving nothing in return. They plan for a retirement but are told too late that they have no pension. There is an £8billion rip off at the heart of the National Insurance system with many women today still unaware that they will get nothing.

“Clearly this problem needs to be addressed so that women, planning for a future based on savings they do not have, are spared the shock of discovering they have little or no state pension rights. The Government needs to write to all women who have ever paid the married woman's "stamp" to warn them that their pension rights may be in jeopardy.

“For older women, the Government should consider allowing them to ‘buy back’ some of the missing years of their contribution record in order to ensure that they get some sort of state pension.

“The Government must launch an immediate enquiry into this miss-selling of pensions. When this happens in the private sector companies are forced to pay out compensation. Its time for the Government to apply the same standards when it comes to state pensions.”

Ø A Steve Webb Commons motion (EDM 1612) highlighting the issue and supporting the Support Women Against Pensions Poverty (SWAPP) campaign was tabled on 11th July 2002, only 2 weeks before recess. In that short period of time 75 MPs including 42 Labour MPs signed it.

ENDS

Notes to Editors

Ø House of Commons library figures based on a parliamentary written answer received by Steve Webb MP reveal that the current value of ‘married women’s rate’ National Insurance contributions stands at £8.232 billion.

NOTE: the figures are based only on post – 1975 calculations. The actual figure is much higher, but the Department cannot provide pre-1975 figures.

Ø The May 2002 Pension Service leaflet, ‘Pensions for women – Your guide’ explains how the system works:

"Until 1977, if you were a married woman you could choose to pay a lower rate of National Insurance contributions. If you choose to do this and you have not paid full-rate contributions, you will not have built up any basic Retirement Pension on your own insurance and you must rely instead on your husband's contribution record.

"Although this choice stopped in 1977, if you were a married woman who had already chosen to pay the lower rate, you have been allowed to carry on paying at the lower rate. You may be able to get a pension based on your husband's contributions when you both reach state pension age and make a claim."

Ø At its peak 4.5 million women were paying the married women’s rate. The Government Actuaries Department (GAD) estimates that 1.5 million of these women are still of working age.

Ø Evidence compiled by the Liberal Democrats shows that many women were not making an informed choice when they paid the married women’s rate, but rather were told that once married this was the ‘done thing’. Many did not appreciate that they would not get gain any state pension rights by paying the reduced rate. One such woman is Mrs. Watts of Weymouth who is happy to talk about her situation. She has set up a national network of women who have found themselves in similar situations. Support Women Against Pensions Poverty (SWAPP) was launched in May 2002.