06 December 2017

Thousands of military wives missing out on nearly half a billion in state pension rights as government schemes fail

4 min read

Steve Webb
Royal London



A scheme designed to protect the state pensions of military wives has failed to reach more than four in five of its target group, according to a Freedom of Information reply from HMRC obtained by mutual insurer Royal London.

Each woman who misses out could lose around £30,000 in state pension through her retirement, with a total loss amongst all the women affected running into hundreds of millions of pounds. Steve Webb, Director of Policy at Royal London is now calling for urgent government action to make sure that service wives get the help they are entitled to.

In 2016 the Government introduced a new system of National Insurance credits designed to help women who spent time overseas as a result of their husbands’ military service. During this period they would not have been making National Insurance Contributions which would have damaged their state pension. In order to recognise the service given by these women they can now claim a credit for any week when they were outside the UK alongside their husband. The key features of the credit are:

  • It can be claimed all the way back to 1975;
  • A full financial year of credits counts as one year towards the 35 years needed for a full state pension;
  • It can even be claimed by widows and those who are divorced, as well as those who are still married to their husband who served in the military.
  • It applies to those who come under the new state pension system, namely women born after 5th April 1953; this is because they can no longer claim a pension based on the National Insurance record of their husband;

When the scheme was launched, Defence Secretary Michael Fallon claimed that the credits could benefit ‘up to 20,000’ wives (see: https://www.gov.uk/government/news/dwp-announces-extra-support-for-armed-forces-spouses-and-civil-partners-to-help-protect-their-state-pension). But a new FOI reply obtained by Royal London (attached) shows that just 3,765 women have so far applied for the credit, suggesting that more than four in five eligible wives are missing out.

Each year of credits adds 1/35 to a woman’s state pension, which is around £237 per year at current rates. This means, for example, that a woman who served five years abroad with her husband could see her pension boosted by around £1,185 per year. Given that the average woman reaching pension age today is estimated to draw her state pension for twenty five years (see: https://visual.ons.gov.uk/how-long-will-my-pension-need-to-last/ ), the value to such a woman would be £29,630 over the course of her retirement. With more than 16,000 women missing out, the combined loss could be up to £480 million.

Commenting, Steve Webb, director of policy at Royal London, said:

"This is a very good scheme to recognise the service of military wives over the years, but the take-up so far has been very poor. Women should not be suffering in retirement for their loyal service alongside their husbands overseas. The Government should not simply wait for people to claim but should actively identify those who might be eligible and make sure that they get the money that they are entitled to."

Steve Webb recently helped one former military couple to claim the credit and they successfully obtained six years of credits. They did not want their personal details to be disclosed but the recently retired Royal Navy commander whose wife accompanied him on overseas postings for well over 6 years said:

"Having tried to navigate my way through the new state pension arrangements with mixed results, I would urge all military spouses who are currently in, or who have been in, married accompanied postings overseas to check whether they are eligible for National Insurance Credits whilst in their overseas postings. It is also important to have an accurate record of the official dates of arriving and leaving accompanied overseas postings. This is a very generous concession to military spouses and goes someway in making up for the recent changes in their pension arrangements, general upheavals and multiple house moves that military spouses are expected to take in their stride."

Those wishing to make a claim for the credit can do so at: https://www.gov.uk/government/publications/national-insurance-credits-for-partners-of-armed-forces-personnel-overseas-after-6-april-1975

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For further information please contact:

Royal London Press Office

About Royal London:

Royal London is the largest mutual life, pensions and investment company in the UK, with funds under management of £117 billion, 8.8 million policies in force and 3,745 employees. Figures quoted are as at 30 June 2018.