Following on from the Government’s admission that it expects to spend £3 billion reimbursing women for underpaid state pensions, LCP partner Steve Webb has identified a new group of women who may be entitled to huge refunds but who are likely to be missed by the DWP’s data search.

Steve Webb has helped three such women recently, one of whom was entitled to £56,000 in back pension, another to £33,000 and a third to over £60,000. Both were, until recently, on pensions of only around £1 per week.

Under a little-known rule, women in this specific group are allowed to claim back pension to before a 2008 rule change which has prevented many other married women from making backdated claims.

Under the old state pension system, there were three main elements – a ‘basic’ state pension, an earnings-related pension (also called SERPS) earned since 1978 and a much older ‘graduated retirement benefit’ which ran from 1961-1975 and which was a forerunner of SERPS. The women who qualify for this special concession are those with zero basic pension (because of the rule which required a 25% contribution record before any basic pension was due) but who are getting a tiny amount of Graduated Retirement Benefit (GRB). The average amount they are receiving is only around £1 per week, but they can make a backdated claim today all the way back to when their husband turned 65.

Official figures derived by Steve Webb from the DWP ‘stat xplore’ website show that around the world there are 23,766 women getting ‘GRB only’. The table shows where these women are now based and how much they receive:

Table: Women on ‘graduated retirement benefit only’ as at August 2020 by country – number of cases and average weekly payment

Source: Steve Webb tabulations using ‘Stat Xplore’ 

In some cases these women may now be living outside the UK with husbands who have little or no UK state pension entitlement. They would therefore not be able to claim meaningful amounts of state pension based on their husband’s contributions. But more than 5,000 are living in Great Britain and there is no reason to suppose that many of those (plus some of those living abroad) could not claim based on their husband’s record.

How much could they get?

Simply adding up 52 weeks of ‘married woman’s’ pension for the period 2008-09 to 2020-21 inclusive gives a figure of £45,604. If the husband turned 65 earlier than 2008, the backpayment could be larger, as with Mrs Davies.

If just the 5,159 women in Britain each received £45,604, the total bill would be £235m. In reality some will be entitled to more than this and some less. But in addition, some of the women living abroad, especially those living in ‘non-frozen’ countries such as the EU would be entitled to similar amounts. The total bill if all these women claimed could easily be a quarter of a billion pounds.

Will the DWP find these women?

Assuming that their husband turned 65 before 17th March 2008, these women needed to make a claim when their husband retired to get their ‘married woman’s’ pension. Although they are in the unusual position that they can still make a backdated claim (see below), DWP’s view would be that they are not technically being underpaid (because they have not yet claimed) and therefore would not be within scope of this exercise.

Why is this group different?

In an email from the Pension Service to Steve Webb, it said that special rules apply to these ‘GRB only’ women. Because they are not getting a basic pension in their own right they are treated as having not yet claimed their pension and therefore if they do claim now this can be treated as a ‘deferred’ claim all the way back to when their husband turned 65, even if this was before 2008.

Commenting, Steve Webb said:

‘It is incredible that there are thousands of women getting such tiny pensions, but even more incredible that many could potentially be entitled to tens of thousands in backpayments. It is as if they are sitting on unclaimed winning lottery tickets. It is very important that women on these very small pensions make contact with the DWP as soon as possible to see if they could be entitled to a windfall”.