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August 12th, 2004, 09:40 PM
Last Updated: Thursday, 12 August, 2004, 23:26 GMT 00:26 UK BBC NEWS
Ask the expert: Women's state pensions
This week's expert is Des Hamilton of Opas
BBC News Online's Ask the Expert column gives readers a chance to have their financial questions answered.
This week Des Hamilton, technical director of the Pensions Advisory Service (Opas), answers a question from Your Money reader Ray Pocklington.
Mr Pocklington wants to know why his wife will receive a much smaller state pension than some of her peers.
Some of her friends have accumulated 15 years of National Insurance (NI) contributions while they were raising their children, but the Department for Work and Pensions has told him that his wife is not entitled to this "credit". Their children were born in 1966 and 1969.
"Can you explain why some women have this 15-year credit and others don't?" Mr Pocklington asks.
"And is my wife entitled to this credit?"
Des Hamilton writes:
Entitlement to the State Basic Pension is earned by paying National Insurance contributions for a minimum number of qualifying years, 10 years in Ray's wife's case.
To get the maximum rate of pension she would have needed 40 qualifying years.
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What Ray is referring to is something called Home Responsibilities Protection (HRP).
Ray's wife would have earned HRP for those tax years where, throughout the whole year, she was in receipt of Child Benefit for a child under 16. However, it applies only from April 1978 when HRP was introduced.
HRP years do not count as years of credit as Ray suggests. What happens is that the number of years required to receive a maximum pension is reduced for every year of HRP.
Thus 15 years of HRP means that a women who required 40 years of NI payments to earn the full pension could still do so with 25 qualifying years.
PENSION GENDER GAP
Men's average state pension: £88.14 a week
Women's average pension: £63.90
*Basic pension and additional state pension, such as Serps. Source: Department for Work and Pensions
Pensioner benefits explained
Q&A: State pension
A 7p a week pension
HRP cannot be used to reduce the number of qualifying years below 20 (22 from 2020).
The women which Ray refers to probably had their children after 1978, whereas Ray's wife could only have qualified for a maximum number of years of HRP of seven.
If she had, when she was working, been paying reduced NI contributions (known as the married woman's reduced stamp), then she would not have qualified for any HRP unless she did not work for at least two whole consecutive tax years since 6 April 1978.
This whole area of HRP is very complex and there are situations where you must apply for it.
If Ray or his wife think she should have qualified and want more information, they can access a copy of "A Guide to State Pensions" (NP46) from the Pension Service website (see link on right) or ring the Pensions Information Orderline on 08457 313233.
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.
Ask the expert: Women's state pensions
This week's expert is Des Hamilton of Opas
BBC News Online's Ask the Expert column gives readers a chance to have their financial questions answered.
This week Des Hamilton, technical director of the Pensions Advisory Service (Opas), answers a question from Your Money reader Ray Pocklington.
Mr Pocklington wants to know why his wife will receive a much smaller state pension than some of her peers.
Some of her friends have accumulated 15 years of National Insurance (NI) contributions while they were raising their children, but the Department for Work and Pensions has told him that his wife is not entitled to this "credit". Their children were born in 1966 and 1969.
"Can you explain why some women have this 15-year credit and others don't?" Mr Pocklington asks.
"And is my wife entitled to this credit?"
Des Hamilton writes:
Entitlement to the State Basic Pension is earned by paying National Insurance contributions for a minimum number of qualifying years, 10 years in Ray's wife's case.
To get the maximum rate of pension she would have needed 40 qualifying years.
DO YOU HAVE A QUESTION?
Send your questions to our experts
What Ray is referring to is something called Home Responsibilities Protection (HRP).
Ray's wife would have earned HRP for those tax years where, throughout the whole year, she was in receipt of Child Benefit for a child under 16. However, it applies only from April 1978 when HRP was introduced.
HRP years do not count as years of credit as Ray suggests. What happens is that the number of years required to receive a maximum pension is reduced for every year of HRP.
Thus 15 years of HRP means that a women who required 40 years of NI payments to earn the full pension could still do so with 25 qualifying years.
PENSION GENDER GAP
Men's average state pension: £88.14 a week
Women's average pension: £63.90
*Basic pension and additional state pension, such as Serps. Source: Department for Work and Pensions
Pensioner benefits explained
Q&A: State pension
A 7p a week pension
HRP cannot be used to reduce the number of qualifying years below 20 (22 from 2020).
The women which Ray refers to probably had their children after 1978, whereas Ray's wife could only have qualified for a maximum number of years of HRP of seven.
If she had, when she was working, been paying reduced NI contributions (known as the married woman's reduced stamp), then she would not have qualified for any HRP unless she did not work for at least two whole consecutive tax years since 6 April 1978.
This whole area of HRP is very complex and there are situations where you must apply for it.
If Ray or his wife think she should have qualified and want more information, they can access a copy of "A Guide to State Pensions" (NP46) from the Pension Service website (see link on right) or ring the Pensions Information Orderline on 08457 313233.
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.