Delayed state pensions: What retirees who put off claiming are entitled to

I hope you can help after reading an earlier column of yours on National Insurance benefits for married women.

I was born in 1952. I have been trying to get a pension forecast from the Department of Work and Pensions since last November so I can see if I can afford to retire.

I am married and my husband is alive and receives an old-age pension. I have paid married women postage for over 30 years and I still work but am now exempt from paying NI.

I finally received a letter from the DWP saying to contact them under this reference, but there is no reference number or details on the letter.

The letter says I have been deferring applying for state pension since 2014 and my weekly rate would be £14.94. I think it says I would get an extra £12.34 a week if I had retired from October 2022.

I just received the letter, but when I tried to call, the number had changed. I thought about writing but then thought how long it has taken for this answer – almost a year – so I thought I’d try it with you first.

Can you help or clarify what I can expect to receive. I think it could be £85 a week according to your column.

The government website says you can dispute your amount once you claim it but I would really like to know now so it’s good from the start.

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Steve Webb replies: Now that you have postponed your retirement for about eight years, it is of course important that you now know what you are entitled to, so that you can make a well-considered choice.

I am shocked that it has taken almost a year to get a letter from the RDW about this and – as I will explain – that the information contained therein is completely false.

Even if you have not yet applied for state pension, because of your year of birth (1952) you fall under the old state pension system, before drastic changes took place in 2016.

In that system, when you delay applying for your pension, you can either have a much higher pension when you eventually retire, or you can opt for a lump sum (plus a little interest) for all missed payments.

When you reached retirement age in 2014, your husband was below state pension age, so your entitlement at that time was based purely on your own insurance information.

Because you paid the reduced ‘married woman’ stamp for decades, you had accrued little state pension yourself.

However, the point that the DWP seems to have missed in the original letter is that your husband reached retirement age in 2016.

At that time you became entitled to a married woman’s pension based on his contributions. In today’s money that would be worth at least £85 a week.

The first letter you received from the DWP (which took almost a year to complete) made no mention of this increased pension based on your spouse’s contributions.

The letter referred to an initial pension entitlement in 2014 of just under £15 a week, and gave you a choice of a permanent ‘bonus’ of around £12 a week if you wanted to take a higher regular pension or a lump sum lump sum . amount of just over €6,000.

This was clearly incorrect, as your husband’s retirement age during the deferral period was not taken into account.

When I presented your case to the DWP, they wrote a second letter to you with very different information.

They now quote you a basic pension of £85.75 per week (based largely on your husband’s contributions).

Plus, because you’ve been deferring for eight years, they’re now giving you the option of a regular raise of another £65 a week on top or a lump sum over £32,000.

Your experiences show how important it is to challenge AOW benefits and notifications if you are not sure how they have been worked out or if you suspect that a mistake has been made.

My concern is that if you hadn’t been alert and reached out you would have missed out on over £26,000 of a lump sum that was rightfully yours.

I often wonder how many other people have found dealing with DWP so challenging that they’ve finally given up and just accepted what they’re being paid. Your example shows that it is always worth persevering.

A DWP spokesperson said: “We are sorry for the initial misinformation provided to Ms [name deleted] and have sent her an updated AOW prognosis in which her entitlements and possibilities to take up AOW are mapped out.’