As a woman born in the 1950’s I have been aware for some time of the Government’s unfair treatment and poor communication of legislative and regulatory changes to State Pensions (SP) for women. There are already campaign groups addressing the unfair changes to the age at which women born in the 1950’s will receive their SP. However I have just discovered another change made in 2016, which amalgamated the two “tiers” of SP into one. This has changed the way in which National Insurance (NI) contributions affect the final amount of a SP, especially for people in my age group where “transitional arrangements” have been made. I feel this has not been appropriately communicated or addressed, and would like to draw attention to it here.
When changes to the State Pension Age (SPA) were first reported, I requested and received an estimate of my new SP Age and amount, and have requested and received such estimates at regular intervals since then, to try and ensure I am not taken by surprise by changes with a negative impact. So I was aware of the additional 17 months on my SPA, and then the sudden addition of a further 4 years and 2 months, but only because I had actively sought this information.
I am fortunate in having been a member of two different employee pension schemes, which provided me with sufficient income to allow me to retire before my SPA, so in late 2015 I left my full-time employment. I was also aware that my total SP would be reduced because one of my work pensions had a contracted-out element. However the SPA estimate letter I received in 2013, on which I based my decisions about further NI contributions, states clearly that I had sufficient years’ contributions to achieve the maximum basic State Pension, and that the calculation for the Additional State Pension amount would not be altered by paying any additional voluntary contributions.
I quote: “People do not get Additional State Pension for periods when they were paying National Insurance contributions on a voluntary or self-employed basis…”
Based on this information, I declined to pay any further voluntary NI contributions for 2016/17 and subsequent years, when I completed my annual Tax Return.
I had no indication that the situation was changed significantly in 2016. Having gone back to look at the estimate letter I requested then, the accompanying booklet contains (at the very back) a note: “Improving your State Pension by paying Voluntary NI Contributions. You may be able to pay voluntary Class 2 or Class 3 NI contributions to cover years where you do not have enough contributions or credits on your NI contribution record for a year to count as a qualifying year.”
I think it is entirely understandable that I did not think this applied to me, given the earlier note. There was no indication that the position regarding voluntary NI contributions had changed for the self-employed, and that I now had “gaps” in my NI record which could be filled and therefore increase my eventual SP Amount.
I would still be unaware of this except that I checked the new online service which provides a detailed NI record, and then phoned the (extremely helpful) staff at the Pensions Office who told me I could increase my pension by more than £14 per week (current forecast) by making payments for the years 2016-19, of roughly £170 for each year.
I am, fortunately, in a position to do so – and to spend a morning pursuing the information necessary for me to calculate that it is worth my while paying a lump sum for the additional weekly income it will generate. I am also fortunate in discovering this change before I claimed my SP, as no changes can be made retrospectively.
Making this change to the way that SPs are calculated, via “qualifying years” and type of contribution, without directly informing people affected, and without even giving them the opportunity to check this, seems to me just as iniquitous as the inadequate notice given to WASPI women of changes to the SPA.
I would be very grateful if you could seek ways of publicising this situation and requesting that the Government, as a minimum, ensures that individuals who may be impacted by this are contacted individually by HMRC, with advice on how the calculation is made and how they might improve their situation.