Divorced Women Missing Out on Pension Boosts Due to Loophole

November 05, 2020  |   Posted by :   |   Blog

Women who divorced after retirement may be missing out on significant boosts to pension payments due to changes in the state pension system.

Pension advisors are urging women aged 60+ who reached state pension age before April 2016 to check if they are entitled to an extra £50 per week in pension payments due to an often-overlooked loophole preventing this higher rate from being automatically applied.

Under the pre-2016 state pension rules there were significant provisions for divorced women in which they could substitute their ex-husband’s national insurance record for their own up to the date of divorce to calculate their basic state pension. This was particularly helpful for women who stayed home to look after children and therefore had not built up their own pension through a career during this time.

If these women divorced and did not remarry before retirement, these substitutions should have automatically take effect when they begin claiming their pension. However, if they divorced after state pension age and did not notify the Department of Work and Pensions (DWP) of their divorce, they will not automatically benefit from this uplift.

If eligible, women who were previously on the standard ‘married woman’s rate’ of £80.45 per week can potentially boost their basic pension to £134.25 if their husband has a full NI contribution record, which could equate to an additional £50,000 in pension payments over a 20-year retirement.

For low-earning divorcees, this increase in payments can be a significant change in retirement income, and pension advisors are urging divorced women over 60 to check their state pension payments and enquire with the DWP to make sure they’re not missing out.

Former Pensions Minister Steve Webb claims there could be 100,000 women who are currently not receiving their full basic state pension. Mr Webb has launched a campaign to raise awareness of these underpayments and is calling on the Government to search its records to correctly identify women for whom extra payments apply.

If you think you may be affected by these changes, make sure to seek professional advice from a properly qualified and regulated financial advisor.


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