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Married women's reduced rate contributions
Around 100,000 women still pay the reduced rate
Money Box's Paul Lewis explains the choices
Married women in their 40s and 50s may still be paying what are called 'reduced rate' married woman's National Insurance (NI) contributions.
These archaic contributions were introduced with the National Insurance scheme which began in 1948. They allow married women to pay lower NI contributions - but they get nothing in return.
The reduced rate contributions were abolished for women who first started contributing after April 1977. But a married woman who was already paying them at that time can still pay them now, as long as she has contributed continuously since.
Around 100,000 married women still pay the reduced rate and more than a million women under 60 have paid them at some time.
The reduced rate is currently 3.85% of earnings between £89 and £585 a week (£4628 and £30,420 a year), compared with 10% for people who pay full National Insurance contributions (8.4% of you are contracted out of State Second Pension).
No rights
But the reduced rate earns you, in effect nothing. You get no rights to a retirement pension, no rights to Jobseeker's Allowance, and no rights to sickness benefit.
All you earn is the right to industrial injuries benefit and maternity allowance - if you cannot get maternity pay from your employer.
So for a weekly payment of between £3.42 and £22.52 some married women are earning no pension and getting almost no benefits at all.
Most married women were not told these details when they were encouraged to pay reduced rate contributions in the past.
Responding to Money Box on Saturday 11 May 2002, Kate emailed us from Hampshire:
"I was interested in your report on reduced pension rights for women. I fall into this category and it is a real scandal that women have not been given any detailed information as to how this would affect their rights on retirement"
And Sheila emailed us to say:
"Like many others, I was told (rather than asked) when I married that I should pay the married woman's NI stamp. When I woke up to this and 'phoned Newcastle, I talked to a very charming and friendly woman who told me that she was in exactly the same situation and that it was not worth my while even thinking about trying to top anything up."
If you want to email Money Box about married women's National Insuranceclick here.
What Sheila was told by the Department for Work and Pensions (DWP) at Newcastle is not necessarily correct.
Extra contributions
Married women can in some circ*mstances pay extra contributions to top up their National Insurance record. They are called Class 3 voluntary contributions and they can be paid for future years and for some years in the past.
Many married women who have paid some full rate contributions before they were married have already earned some retirement pension, and will find that paying extra contributions now can boost the pension they are due.
However, what the DWP said is correct for some women. Class 3 contributions cannot be paid:
As a result many married women are stuck with an incomplete contribution record that they cannot now repair.
However, that is not true for all married women paying the reduced rate. Some women should cancel their right to pay reduced rate contributions and consider paying extra contributions now.
This applies especially to married women who:
Advantages of paying full NI contributions
Women who pay full NI contributions will gain in five ways:
What to do next
First, you should get a retirement pension forecast. You do this by getting form BR 19 either from your local benefits agency office or direct from the website of the Department for Work and Pensions (you can even fill it in online).
Second, decide if it is worthwhile paying extra contributions for the extra pension you could get.
Remember when your husband retires you will get a 60% married woman's pension based on his NI contributions and if you are widowed or divorced you in effect get a full pension on his contributions anyway.
Third, if you want to give up the right to pay reduced NI contributions, get leaflet CA13 National Insurance contributions for Women with Reduced Elections from your local Inland Revenue office and fill in and return Part A of the form CF9 in the back of the leaflet.
That will ensure you pay full contributions in future and will be allowed to pay Class 3 voluntary contributions if you choose to do so.
Paul Lewis 11 May 2002
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