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23 May 2000 : Column 182WH

Pension Rights (Married Women)

11.30 am

Mr. Steve Webb (Northavon): I wish to raise an issue of justice that affects thousands, perhaps millions, of married women throughout Britain. Much of my speech will consist of short excerpts from letters that I have received from married women, because I want the debate to consist not of a politician from one party criticising a politician from another party, but of the authentic voice and anger of married women pensioners and those approaching pensionable age.

I shall begin with a letter from a Mrs. R. of Chingford, who says:

I am 54 years now...I have worked since I was 17 except for 3 years when I had my son, and am only entitled to 99p per week...It looks as though a lifetime of work and paying NI will leave me a very poor pensioner. That is typical of the sense of injustice and anger in the 40 or 50 letters that I have received--a further four arrived this morning--on this issue.

As word gets around, I receive new letters expressing happiness at the fact that someone is taking up this issue, and I hope that the Minister will respond positively and constructively to the debate. I cannot hold the present Government responsible for these problems, many of which occurred decades ago, so I hope that the Minister will not adopt a defensive posture, but will join me instead in trying to right an historic injustice.

As the Minister will know, married women were initially allowed to pay a reduced rate of national insurance contributions in return for forgoing pension and certain other benefit rights. From 1977, no new cases were allowed, but 4 million women--about one in 10 of the then adult population--were allowed to continue with such payments, so the scale of the problem is large. In 1989, national insurance for the low paid was restructured, so that many married women on the reduced rate paid no more--perhaps even less--in opting instead for full national insurance. It is the initial system, the 1977 reforms and the 1989 reforms that I want to examine today.

The Department may have believed that married women who paid reduced national insurance contributions knew what they were doing, given that they signed a form stating that they had read the booklet and had made an informed trade-off. However, the reality is very different. Many married women have written to me saying that they had no idea how the system worked. Mrs. R. of Oldham said:

I recently wrote for a pension forecast and was appalled to find that I am only entitled to a pension of £22 when I reach the age of 60 in two years time...Absolutely no information was given to the fact that we would receive such a derisory pension. Had this been made clear at the time, I would immediately have elected to pay the full contribution.

There is also ignorance about the home responsibilities protection provisions. Mrs. S. of Weston said:

I was advised to pay a reduced stamp. I was not made aware at the time that I would not receive HRP credits for the time bringing up my children.

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That issue has been raised by a number of women. Mrs. S. says that


thousands of women like myself...did not fully understand the implications of being on a reduced NI stamp until it was too late. In other words, people genuinely did not understand the way in which this complex system worked. In many cases, married women did not make an informed and considered choice to save money now and pay in future--it was not like that.

Not only did many people not understand the system; some were given no choice. Mrs. S. of Morecambe writes:

In 1975 I got a small part-time job and told my then employer that I wished to pay full NI contributions. I was informed that this was not possible as all married women in part-time jobs had to pay reduced contributions. She continues by emphasising:


At no time did I elect to pay reduced rate. The Minister may say, "That is not possible: she must have signed a form." Perhaps she did, or perhaps the employer added her name to it--who knows. However, her perception is that she did not choose to pay reduced rate and would not have chosen to do so, had she known what was going on.

Some married women were given duff advice by their employers. One of my constituents, Mrs. H. of Compton Greenfield, who went back to work part time in 1972, was given no choice. She says:

My employer at that time employed an accountant who automatically deducted the reduced rate, and the implications were not explained to me. At no time was I informed about pension rights. Some women asked their employers and got duff advice. Perhaps more worryingly, some also got duff advice from the Department of Social Security. For example, Mrs. J. of Billericay says:


I reached retirement age in October 1999 and filled in the form. The amount was £19.65 per week...I elected to pay married women's stamps when I got married in 1964-- this is the key element in this case--


because the Social Security said this would secure a full pension in my own right at 60 years, topping up my husband's contribution. She went to the DSS and got duff advice. Similarly, Mrs. M. of Yeovil states:


A work colleague and myself were informed by the DSS office at Yeovil that, regardless of the stamp amount paid...our pensions would not be affected.

The Minister will have seen The Daily Telegraph on Saturday, which carried a story about a lady who had contacted me. When she asked, she was told that she had asked the wrong questions. That is the problem. People do not know how the system works. When they ask questions, they are given duff information; they are told that they have asked the wrong questions. If only they had known the right question to ask, they might have been given the right answer. That is the backdrop to the issue.

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The 1977 rule change prevented newly married women from opting in. Married women at that time were contacted. I am not saying that the relevant information was not in the forms, nor that letters did not go out. I am aware that contact was made. However, I am querying the nature and the effects of the contact. Mrs. K. of Oldham says:

In 1977 when the law changed, I along with many others asked for advice either from our employers or the local social security office. The advice I got was "don't bother, you'll not get a pension, you won't have enough stamps on when you retire." That woman is now receiving a pension of £29 a week. She says:


Just think what it could have been if I had started paying when I was 40. That was when the issue arose. The advice given may have been right for some people, but I guarantee that it was not right for all.

Similarly misleading advice from the DSS can be found in the case of Mrs. M. from Wotton-under-Edge, who says:

In the 1980s-- after the rule change--


I telephoned the national insurance office to ask if this would affect my full pension at 60, and was told emphatically that it would make no difference whatsoever to my full pension at 60. That was very clear.

A further example, relating to home responsibility protection and to the contents of the paperwork, is that of Mrs. C. of Dursley, who used to work for the DSS. She says:

When the election had to be confirmed, we were not issued with any paperwork or guidance. The certificate of election does not give any details--the implications on HRP do not get mentioned.

With regard to home responsibility protection, women who did not work at all would receive credits on their pension. Women paying full-rate national insurance would receive a pension entitlement. However, women who worked and paid some national insurance would receive no home responsibility protection. They would have been better off from the point of view of their pension if they had paid no national insurance at all. That is a crazy situation, and it is not surprising that no one understood it.

In 1989, we reach the key point in this saga. The Government reformed national insurance so that low-paid workers who did not pay much national insurance would have the right to a full pension. However, married women went on paying what was still called the reduced rate, which, by comparison, was pretty similar by then. Many women would have been well advised to go back in at that stage: all those who could have saved on national insurance by so doing, and those who might have paid a few pence more but started to build up pension rights. However, there were again problems with publicity. Mrs. K. of Oldham says:

I don't remember a major publicity campaign in the late 80s. How would people know about leaflets at the local Benefits Agency? It wouldn't have been difficult to get in touch with those concerned...[they] don't seem to have any problem when it's an underpayment, do they? That lady knew nothing about the change in 1989.

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Likewise, Mrs. Y. of Bath says that she did hear from the Department but could not make head nor tail of what she was told. She says:

I can remember having a letter many years ago...saying something about paying the higher rate National Insurance, but it was written in the usual official jargon which few understand and it certainly was not drawn to one's attention as being of major importance...the DHSS must have realised from the lack of response that thousands like me had not understood the full implications and should have issued something in "normal English" which spelt out the advantages a little better. That is a key point. The change in 1989 should have prompted many married women to opt back in to the full rate and the number of women on the reduced rate should have dropped correspondingly, but that did not happen. The Department of Social Security should have noticed that few people had responded to the change and realised that it needed to try harder.

Two groups have been particularly affected. The first of those is women with much younger husbands; I refer to this as the toy boy problem. One woman said in her letter:

My husband is 15 years younger than me. That means that she will be 80 before she receives a pension on his contributions to the age of 65. She might be dead by then, having had 20 years of retirement with no pension in her own right. The Minister may say that for many women it will not matter, because they will get a pension on their husband's entitlement and could not have made as much on their own contributions. However, for the woman that I quoted, and others like her, it matters a great deal.

The second group comprises women who worked on a full stamp before they were married. Mrs. C of Guildford states:

We were advised verbally that it was a waste of time paying a full stamp, but not told of the implications. The eight years I worked before marriage paying full stamp were wiped out. In a couple more years, she would have had a 25 per cent. pension, but all those years were wiped out because she did not quite make the threshold. She probably could have got a pension, but was wrongly advised.

Pensioners from around the country have been telling me of the disgust that they feel when they receive their pension forecast, which is often the first time that they realise--at the age of 58 or 59--that they are expecting a pension that will not materialise. Mrs. M. of Wotton-under-Edge said:

I was 60 in 1995 and ... had written to ask for a printout of my pension rights. I was totally shocked when it came back stating my pension would be 8p per week. She had only seven years' worth of full stamps but, when she offered to make it up to 10 years, was told that she had left it too late. She continued:


I asked why I had not been advised but was given a curt answer. I have always been totally disgusted with the way the pension blunder has been handled by the government-- that is, the previous Government. In practical terms, some married women cannot retire; they have to carry

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on working because they do not have enough money to live on. Mr. Y. of Tyne and Wear wrote:


My wife receives the princely sum of 65p per week pension ... she still works although she would like to retire--why can't she?--because the pension would not let her.

Married women all over the country who are just below, or above, pension age are disgusted, appalled and shocked when they receive such forecasts, because they had no idea how the system worked or they were given bad advice. Some are having to carry on working, and most feel that this is another case of women getting a raw deal out of the pensions system.

What should be done? I sought to give the Department advance warning of some of the points that I wanted to raise, and hope to receive recognition that the matter needs serious, long-term investigation. I ask the Minister to deal with three aspects in his response. First, married women deserve an apology--not from him, but on behalf of successive Governments--for the way in which they have been let down by the pensions system. One can argue that the forms gave the necessary information, and that if people had known the right questions to ask and had been aware of how the system worked there would have been no problem. However, many were not in that position and they continue to write to me every day to tell me so. They deserve an apology.

Secondly, the matter deserves serious consideration by the Government. I was treated somewhat dismissively by the Secretary of State when I raised it during Social Security questions a few weeks ago. The cases that I have mentioned, and others, require independent investigation, perhaps in association with Age Concern or another organisation that has contact with pensioners' groups. People must have confidence that a root-and-branch investigation into what went on and what went wrong is being undertaken.

Thirdly, redress must be given. That may be different in every case and inappropriate in some. Nevertheless, where people have been misled by officialdom, or if the Government have failed to contact them to tell them how the system works and what to do about it, the Government--even the successor Government--have a duty to respond to those cases, perhaps by reconsidering the home responsibility protection rules, or by allowing people to buy back years, even some years later. There may be other forms of necessary redress, but redress must be made.

The 40 or 50 letters that I have received are the tip of a large iceberg. I am grateful for the chance to bring the matter to the attention of the Chamber, and I look forward to a constructive response from the Minister.

11.45 am

The Minister of State, Department of Social Security (Mr. Jeff Rooker ): I hope that I will be able to give the hon. Member for Northavon (Mr. Webb) a response that will be at least partially satisfactory. No Minister could ever give a totally satisfactory response in a half-hour debate such as this.

What is perceived to have gone wrong in the cases mentioned by the hon. Gentleman--although I note that the ages of the individuals vary--was a long time ago; in a bygone age, as far as my Department is concerned. To refresh my memory of the issues, I have

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checked parliamentary questions that I asked and comments that I made in the 1970s. In the late 1970s, changes were made which prevented married women from opting out if they were new to the work force. There was also the abolition of the half-test rule. At one time, I had a file 6 in thick, and I remember writing to those constituents for whom we were unable to put matters right, saying that we had put them right for the future and that the next generation would not be in the same mess.

I remember asking my noble Friend Lord Orme, who was a Social Security Minister at the time, why the Department could not give advice. It was as if there was an ordinance that Departments did not give advice--they were not in the advice business. All we could say to constituents was, "Make a claim and you will get a decision", when what they really needed was an advice shop in the Department. I can assure hon. Members that, in the 1940s, '50s, '60s, '70s and most of the '80s, no such thing existed.

The culture has changed since then, although I do not say that the future is completely rosy. The women whose cases the hon. Gentleman has raised are, rightly, aggrieved about the way in which they have been treated. However, most people in this country have not got a clue about how the national insurance system works. I must be careful about my language; it seems to me that most people do not fully appreciate the starkness of the position. Single men pay the same rate of national insurance as married men. The stark reality is that married couples who rely on the pension of the man are subsidised by the contributions of single people. Although no one puts it quite like that, that is how the system works. There is no differential between the rate for single people and married men. A married man will collect 160 per cent. of pension, including 60 per cent. for his wife, if she is not contributing.

There are many quirky bits such as that in the national insurance system and, occasionally, they come up and bite us. I remember the married women's option, as it was called; I dealt with it when I was a junior manager in the engineering industry in the 1960s. It was a flat rate of one shilling. Everyone knew that the only thing that it covered was industrial injury. The women on the production line at Salter's in West Bromwich knew that--it was common knowledge. That was all they got for their shilling. Of course, their wages were so low that they could not have contemplated paying the full rate. More women were coming into the work force, but they were, predominantly, on low pay. That is why there were campaigns about equal pay and related issues at that time.

There was an informed choice. The hon. Gentleman may know of someone who claims that they did not sign a form. However, we still have tons and tons of paper records around. There was a form that had to be signed. I admit freely, having read it again this morning, that the form was not brilliantly clear, and I can guarantee that it would not pass the plain English test. Nevertheless, a signature was required before someone could opt out of the full rate of national insurance.

To that extent, it had to be an informed choice, and leaflet NI1 did explain the situation in relation to pensions. By the 1970s, many more women were working, which was the reason for the change in 1977. The option was withdrawn in the 1978-79 tax year

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because 3.6 million women had opted out of the full rate of national insurance contributions. That figure is now 175,000. We stopped that unfairness for the next generation, and that reduction over 20 years means that we are on the way to eliminating it. That may not solve the problems of the examples given by the hon. Gentleman this morning, but reducing the number of women who opt out means that more will collect a lifetime's national insurance contributions because, by and large, women are working longer and the difference in wage rates is closing.

I do not suggest that everything was hunky dory under the previous Labour Government, but things started to go wrong in 1989 when the structure of national insurance contributions changed and gave rise to an anomaly in which someone who opted out might end up paying more national insurance than someone who was paying the full rate. The change in 1989 was for the good reason that, unlike tax, a £1 rise in wages might result in a £3 rise in national insurance contributions. That was barmy and the then Chancellor, Lord Lawson, introduced the change to deal with that.

In August 1989, a mail shot to the women concerned advised them to examine their position before the structural changes were introduced. The Government wrote to those women in a form that would probably not pass the plain English test--that is a bold statement, but the wording of the document does not look like plain English to me. A warning bell was rung and a light flashed to warn women to take action, but not many seem to have done so. I do not know why.

Further changes have been introduced more recently so that many women on low earnings do not pay contributions, but will be credited to the level of the basic state pension. It is beneficial for married women on low earnings to revoke the reduced rate election if they have continued to work and have remained opted out since 1978. The Inland Revenue now administers national insurance assessment and collection and is planning a mail shot later in the year to target those women.

I have seen some of the hon. Gentleman's questions, most of which go to the Treasury, which deals with national insurance matters, but I may not have seen all of them. Any Government mail shot in 2000 should be checked for plain English and it should be clear and explicit about what to do if people have questions. The Government would fail if they sent out a mail shot that was not consumer friendly. We estimate that some 6,000 women will receive it.

When the Labour Government made the changes in 1977, we did not want married women to lose out later in life and, in a leaflet, we gave a full explanation of the changes. However, not everyone, particularly if they are working shifts, checks with the Benefits Agency. In those days, it was impossible to get through on the telephone and letters were not answered for weeks, even letters from Members of Parliament. The system for responding to the public has been vastly transformed, but in the 1970s and 1980s it was not a customer-friendly service.

The hon. Gentleman was unfair to say that my right hon. Friend the Secretary of State for Social Security was dismissive when the hon. Gentleman asked a question on the Floor of the House last Monday. My

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right hon. Friend said that the hon. Gentleman had asked the question before, but had not given sufficient information. I repeat that now. I require more information than the hon. Gentleman has provided when he has written to me in the past.

I have some correspondence in which I was given only the name of the lady in question. It contains no address, date of birth or national insurance details, yet I was asked to say that she should be eligible for an increase in her pension because she had worked in a Royal Ordnance factory during the war. I had to write back and ask for more information. If we have the basic information to enable us to check the files--date of birth, national insurance number, maiden name and so on--we will check every case submitted to us.

In cases in which someone has made a genuine inquiry--perhaps in the form of an early forecast requirement--and has been misdirected, there remains the option to buy back in. We must be careful that that would not constitute a one-way bet against the taxpayer. Every case would have to be individually assessed. However, I do not believe that there is any need for a large-scale inquiry. This is not like the issues surrounding SERPS.

However, if it appears after evidence has been submitted and we have checked our files that someone has been misdirected or misinformed by my Department, we will consider allowing her to buy back in the contributions that she has missed. In that way, she would be able to regularise her benefits. Successful applicants would be given the opportunity to pay arrears at the rate in force at the time that the payment was due. For some women on low incomes, that could even lead to a refund.

Mr. Webb : Would the Minister include in that category the people who, since 1989, could have saved money by going back into full-rate contributions?

Mr. Rooker : I am not sure about that. It would not be possible, once one had elected to come out, to swap over again. We are quite prepared to look at each case on its individual merits. We do not have any such cases before us at present, although from time to time, people make individual inquiries of the Department. The situation is not unique.

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In 2002, we shall start to operate the pension forecast. It will be phased in over a number of years, and will mean that everyone who is working will receive a pension forecast every year. It will include information on their state pension and their occupational pension. Women and men in their 20s and 30s, among others, will receive a P60 and a pension forecast every year. They might respond by saying, "I thought it would be more than that. What can I do about it?" The time to ask such questions is earlier, rather than later when one cannot do anything about it.

I have heard from constituents who have discovered at the last minute that their pension entitlement was 24 per cent. If one's pension entitlement is less than 25 per cent., it will be zero. Unfortunately, some people find out about such things at the last minute, when it is too late to make up the shortfall. They will get zero. That is an aspect of the workings of the national insurance system that has been in place since it started. Nothing is being reinvented here.

However, I take on board the points raised by the hon. Gentleman and, if we have evidence of misinformation or misdirection in individual cases, we shall do our best to check the files and, if need be, regularise the situation. We are not asking people to turn the clock back, but we shall need evidence in these cases. I hope that, in 20 years, there will be no need for a Social Security Minister to stand up and answer this kind of question.

Mr. Webb : The Minister mentioned evidence. Obviously, it is very difficult to obtain evidence from 10 or 20 years ago. What sort of evidence does he have in mind? Does it have to be documents?

Mr. Rooker : I suspect that it will have to be. Unlike in the circumstances relating to SERPS, the burden of proof will not be on the Department. When the changes were made, mailshots were carried out. The publicity was adequate in the sense that leaflets were sent out by the Department and debates were held in the House. I realise that the media now tend to ignore the House but, in those days, they used to report the House more thoroughly, so there is less excuse for people being ignorant of this matter. However, we will look at every individual case that is put to us.

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