I am a 74 year old married woman on a reduced state pension as I have a few years before retirement.
Between 1978 and 1985 I was at home taking care of three children, all under the age of 16.
Four of those years counted towards my state pension. However, I was denied the period from 1978 to 1981 because I allegedly paid the “small stamp” of a married woman.
State pension: I lost even though I only paid the married woman stamp for a year (stock image)
My youngest daughter was born in 1979 and I don’t think I worked during those years. When I inquired, I was told that in 1978 I had three small part-time jobs and paid a small stamp.
They didn’t think I was employed between 1980 and 1981, but the system assumed that if I had worked I would have paid a small stamp – even though I never worked during those two years.
Apparently I should look into the crystal ball and tell them (whoever they were) that if I went back to work I wouldn’t choose the little stamp again.
In reality I have paid full social security all my working life from the age of 16 when I was employed full time or later self employed except for 1978. Is there anything you can help me with?
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Steve Webb responds: When the Social Security system was created after World War II, it was assumed that for many couples there would be a husband to earn a living and a wife to be financially dependent on him both in working age and in retirement.
Based on this assumption, married women in paid employment could opt for a lower rate of social security contributions.
This is officially known as “reduced-rate election” but is more commonly referred to as paying the “married woman’s stamp”.
The deal stipulated that married women would save money from their NI contributions for those years, but would not build their own state pension for those years.
In retirement, it was understood that a married woman would not receive her own pension, but could receive a 60 percent basic “married woman” pension when her husband retired.
This would be based on his record of NI contributions.
By the mid-1970s, over four million married women were paying the reduced rate.
However, with the much greater focus on equality in the workplace, it seemed increasingly inappropriate to base a public pension system on the assumption that millions of women depended solely on their husbands financially.
As a widow, did you waive the lump sum of the statutory pension?
This is Money columnist Steve Webb is urging elderly widows who may have missed out on back pay following the death of their husbands to get in touch.
He wants to help people get the money they deserve and find out if there’s a systematic problem that hasn’t been addressed in the government’s massive corrective action on older women who were underpaid.
Find out if you may be affected and how to contact Steve here.
> Have you lost your state pension if you were widowed in retirement?
As a reaction to this, a law was passed in 1975 which stipulated that from 1978/79 newly married women could no longer opt for the “reduced stamp”.
However, some women have been paying a reduced stamp for many years and may not have benefited from a short period of full stamp later in their careers. Therefore, it was decided to allow those who already had the reduced stamp to continue their journey.
Crucially, if there were a gap of more than two years with no NI being paid at all, the ability to continue paying a reduced postage stamp after 1978 would be forfeited.
After such a gap, a married woman returning to work would have to resort to the full stamp again.
Unfortunately you seem to have been caught out by this rule.
From what you’ve said, it sounds like you did some reduced-rate work in 1978 (however, if you happened to have documentation from that period with a payslip showing you paid full rate, you could dispute this) .
If so, your “Reduced Rate Choice” will remain in place for the following two years unless you actively opt out.
This meant that although you were not working you were considered listed on the small stamp for 1979/80 and 1980/81.
As you have found, each year that you have paid *or been eligible* to NI for the reduced stamp is a deletion in your NI record.
In particular, it was decided that women with the reduced stamp could not get an HRP, even though Home Responsibilities Protection (HRP) had only just been introduced for those at home with children.
So although you were home with children in 1979/80 and 1980/81 and could otherwise have benefited from HRP, you did not because of your ‘living’ decision to pay the reduced stamp.
As you say, the only way you could have avoided this was to actively ‘revoke’ your election to the reduced tax rate in late 1978/79.
Unfortunately, it’s now difficult to see how to fix this.
The whole ‘stamp for married women’ system has caused frustration for many people over the years and resulted in many women receiving fewer pensions.
Ask Steve Webb a retirement question
Former Pensions Secretary Steve Webb is the uncle of This Is Money’s Agony.
He’s available to answer your questions, whether you’re still saving, finishing your job, or juggling your finances in retirement.
Steve left the Department for Works and Pensions after the May 2015 election. He is now a partner at Lane Clark & Peacock, actuarial and advisory firm.
If you would like to ask Steve a question about pensions, please email him at firstname.lastname@example.org.
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If Steve can’t answer your question, you can also contact MoneyHelper, a government-backed organization that provides free retirement assistance to the public. It can be found here and phone number 0800 011 3797.
SteveWe get a lot of questions about government pension projections and COPE – the Contracted Out Pension Equivalent. If you write to Steve on this topic, here is his response to a typical reader question about COPE and the state pension.
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