We will use your email address only for sending you newsletters. Please see our Privacy Notice for details of your data protection rights.
State Pension is often the key to a comfortable retirement, with pensioners entitled to a specific amount to assist in their later years. However, there has been a fresh call for tens of thousands of women to check their entitlement. Women who divorce later in life, known as ‘silver splitters’, could potentially be missing out on a substantial sum of money in their state pension, analysis has revealed.
A study undertaken by Lane Clark & Peacock LLP (LCP) has highlighted a complex system which is likely to mean many are unaware of the money they could receive.
Insights from the Office for National Statistics revealed that from 1998 to 2018, over 100,000 women aged 60 or over divorced.
Numbers have now risen to approximately 6,000 women per year divorcing in the UK.
It is the overwhelming majority of these women who have reached state pension age before April 6th, 2016, and who therefore fall under ‘old’ or basic state pension rules.
The older system of state pension, while having a maximum rate which is less than the new state pension, does offer provisions for women who obtain a divorce.
However, a pension uplift can only be received in these circumstances if the Department for Work and Pensions (DWP) is actively notified that the divorce has taken place.
LCP has warned that many women may not be aware of this fact, or have been simply put off when they attempt to action it.
The old state pension system allows women who have divorced to substitute their ex-husband’s National Insurance record for her own up to the date of their divorce.
This can be done for the purposes of calculating a woman’s basic state pension entitlement.
HMRC issues important warning on tax rebate scams – key signs [REVEALED]
Money saving tips: Britons could save over £1,000 in just 60 minutes [ANALYSIS]
First Direct opens ‘money positive’ current account for new customers [INSIGHT]
And it is very likely that women could stand to substantially benefit from such an action.
If a woman was previously on the typical ‘married woman’s rate’, which stood at £80.45, she could increase her sum to £134.24 if her ex-husband has a full National Insurance record.
Across 20 years, LCP has said, a woman could therefore increase her state pension income by over £50,000.
Automatic substitutions on state pension sums should have taken place for women who divorced and did not remarry before they reached state pension age.
However, if women choose to divorce after their retirement, there is no such automatic process in place.
As such, women have been urged to take heed of the little known advice, and action an uplift if necessary.
Sir Steve Webb, former pensions minister and partner at LCP, commented on the situation many older women are currently facing.
He is urging women who divorced over pension age, who reached this age before April 6, 2016 to notify the DWP urgently about their circumstances.
He said: “Every year thousands of women over state pension age get divorced, but many may not be aware they can qualify for a state pension boost as a result.
“Worryingly even some financial advisers, lawyers and DWP call handlers seem to be unaware of the rules.
“Any woman who reached pension age before April 6th 2016 and has since got divorced should contact the DWP if she is not on a full basic state pension to see if she is entitled to an increase based on her ex-husband’s contributions.”
The DWP, in response to a Freedom of Information request told Sir Steve: “We do not keep records of people making applications for uplifts in state pension at specific points in time.
“We do not track the amounts of state pension people receive over time.”
People can usually contact the DWP through phoning the designated number, but they can also receive free independent help from Citizens Advice on any pension queries.
Source: Read Full Article