Do you have the right AOW pension? STEVE WEBB reveals the 'magic minimum'
Steve Webb: The vast majority of pensioners should earn at least £93.60 a week
Former Pensions Minister Steve Webb is the popular uncle of This is Money and partner at pension adviser LCP.
New Year's Eve is a good time for people to easily check whether they are receiving the correct amount of AOW.
This is especially true now that the Department for Work and Pensions claims to have completed the process of checking errors for key groups of state pensioners, married women and the over-80s.
Anyone still on a low pension needs to take action – and the 'magic minimum' is £93.60 a week.
The vast majority of retirees should receive at least this amount.
The exact rules depend on whether people are covered by the old or new state pension system, but anyone with less than this amount must do so Contact the Pension Service to see if an error has been made and/or if they need to make a further claim to get the higher rate.
Certainly any woman who believes she is being underpaid and has been told by DWP 'don't call us, we'll call you' needs to be proactive now.
The new year is an ideal time to get this sorted out once and for all, and here's what you need to know.
Old state pension: before April 6, 2016
For anyone who reached retirement age before April 6, 2016 and is on the old state pension system, there are two groups of people who should receive a pension of £93.60 per week or more.
– Anyone aged 80 or older who meets a basic residence test. They are entitled to a pension of £93.60 per week, regardless of their NI contributions, their income or their marital status.
The residence rules for claiming the over-80s pension are:
a) You have lived in Britain for at least 10 out of 20 years (this does not have to be 10 years in a row) – this 20 year period must include the day before you turned 80 or the day after that, AND;
STEVE WEBB ANSWERS YOUR PENSION QUESTIONS
b) You were 'ordinarily resident' in Great Britain, the Isle of Man or Gibraltar on your 80th birthday or the date you claimed this pension, whichever is later.
– Married women with a husband who has reached state pension age. If the man has a full basic pension, the woman can claim a 'married woman's pension' of £93.60 per week.
The same also applies in the (less common) case in which the man himself has a low pension and the woman has a full basic pension.
However, please note that if the man has less than a full basic pension (currently £156.20 per week) due to gaps in his data, the 'married women's pension' will be reduced accordingly.
The pension system has sometimes failed to offer these two groups the right pension. My research with This is Money revealed these state pension errors.
The DWP has carried out a major corrections exercise starting in 2021 to resolve these issues.
By the end of October 2023, the DWP said it had corrected underpayments for around 37,000 married women and 27,000 over-80s, with arrears totaling more than £270 million paid out.
It also said it expected all corrections for these two groups to be completed by the end of 2023.
This means that it is very unlikely that anyone in these two groups who is still on the wrong pension rate will be contacted by DWP and need to take action now.
There are two scenarios for those over 80.
– Anyone who received a certain basic pension but was below the standard rate of £93.60 should have been *automatically* upgraded to the rate of £93.60 when he or she turned 80.
– Anyone who was not receiving a basic pension at the age of 80 became entitled to the rate of £93.60, but only if they made a claim.
For married women, there are also two scenarios.
– Married women on a pension below the rate of £93.60, and whose husband reached retirement age on or after 17 March 2008, should have had their pension increased automatically.
– For married women on a pension below the rate of £93.60 and whose husband reached retirement age before 17 March 2008, an increase to £93.60 was available, but only if they re-claimed a state pension .
Individuals receiving less than £93.60 per week should ensure they have made a claim for this if necessary.
New AOW: After April 6, 2016
Broadly speaking, anyone with 16 years or more of NI contributions or credits should receive a state pension of £93 or more. This is because 16/35 of the full rate of £203.85 is £93.18 per week.
If someone has a pension that is less than this amount, it may be because they are missing National Insurance credits for years at home with children (formerly known as 'Home Responsibilities Protection').
In this case, the individual should claim the missing NI credits using the CF411 claim form. Adding this to someone's file should increase their weekly pension and generate arrears.
In addition, women who paid the 'married women's stamp' 35 years before reaching state pension age are eligible for a special concession and are entitled to a pension of £93.60. However, in some cases the DWP has overlooked these cases and therefore must be challenged.
How to contact the DWP
Contact the Pension Service if you already receive an AOW benefit.
Contact the Future Pension Center if you have not yet reached state pension age, currently 66 years.
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