The divorce rate in the over 60s continues to increase and over the past few decades thousands of women have divorced when in their sixties or older. Many of them have missed out on valuable state pension incomes due to a complex and little understood system.
It has been estimated that some women will have lost more than £50,000 of income over their lifetimes by not knowing about this simple claim which relates to the old Basic State Pension.
What is this little known about claim?
It is called “National Insurance substitution”. This only applies to people who reached state pension age before 6 April 2016.
In those cases if they divorce they are entitled to apply to replace their own National Insurance contribution record up to the date of their divorce with that of their ex husband (for the period up to and including 5 April 2016 if they had not also reached state retirement age by that date) .
How does it work?
The effect is that they will get the basic state pension applicable to their ex-husband’s National Insurance contributions rather than their own, which can mean a considerable uplift in the Basic State Pension which is not something that can be the subject of a pension sharing order on divorce.
This claim is made at no cost to themselves or their ex-spouse – it does not reduce the ex-spouse’s own record at all. The problem is that many people do not know about this additional provision that could be claimed.
How can women claim for additional pension income?
The claim is made to the DWP by sending their original decree absolute or a certified copy of it together with confirmation of their ex-spouse’s NI number. Very few family lawyers (or people working in the DWP) are aware of this claim as it is so rarely made and so you may have to be persistent to get it implemented.
It must be stressed that this additional pension can only be claimed by those who reached state pension age before 6 April 2016 – after that time no such provision exists and they are dependent on their own National Insurance contributions to determine their state pension income.
In these cases there is even more need to take expert advice on divorce as the lack of a full state pension should be factored into the overall financial claims that are made within divorce proceedings. This lack of comparable state pension income could be compensated by:
- a pension sharing order relating to any non-state pension provision their spouse has; or
- additional capital to enable them to top up their NI contributions (confirmation of the shortfall should be confirmed to back up this claim); or
- spousal maintenance to share the state pension income (although this would end if the payer dies or the recipient remarries).
The receipt of a full state pension is a surprisingly valuable benefit which should never be ignored in divorce settlements. We are well placed to advise you on all the options there are to address this important point. It has been estimated that the capital worth of a full state pension is in excess of £300,000, so this is a vital consideration for divorcing women who are often short of National Insurance contributions due to not having worked full time or at all.
At Stephens Scown we are well versed in the complicated area of pensions and divorce and are able to offer advice on all aspects of this issue. We have established links with actuaries and other specialist advisers to enable us to offer a full service in this area.