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Married women's reduced rate contributions
Paul Lewis explains the choices

Married women in their 40s and 50s may still be paying what are called 'reduced rate' married woman's National Insurance (NI) contributions.

These archaic contributions were introduced with the National Insurance scheme which began in 1948. They allow married women to pay lower NI contributions - but they get nothing in return.

The reduced rate contributions were abolished for women who first started contributing after April 1977. But a married woman who was already paying them at that time can still pay them now, as long as she has contributed continuously since.

Around 100,000 married women still pay the reduced rate and more than a million women under 60 have paid them at some time.

The reduced rate is currently 3.85% of earnings between 89 and 585 a week (4628 and 30,420 a year), compared with 10% for people who pay full National Insurance contributions (8.4% of you are contracted out of State Second Pension).

No rights

But the reduced rate earns you, in effect nothing. You get no rights to a retirement pension, no rights to Jobseeker's Allowance, and no rights to sickness benefit.

All you earn is the right to industrial injuries benefit and maternity allowance - if you cannot get maternity pay from your employer.

So for a weekly payment of between 3.42 and 22.52 some married women are earning no pension and getting almost no benefits at all.

Most married women were not told these details when they were encouraged to pay reduced rate contributions in the past.

Extra contributions

Married women can in some circumstances pay extra contributions to top up their National Insurance record. They are called Class 3 voluntary contributions and they can be paid for future years and for some years in the past.

Many married women who have paid some full rate contributions before they were married have already earned some retirement pension, and will find that paying extra contributions now can boost the pension they are due.

However Class 3 contributions cannot be paid:

  • for any years when married women's contributions have been paid (and for two years after unless you give up the right to do so) and:

  • for years before 1996/97.

    As a result many married women are stuck with an incomplete contribution record that they cannot now repair.

    However, that is not true for all married women paying the reduced rate. Some women should cancel their right to pay reduced rate contributions and consider paying extra contributions now.

    This applies especially to married women who:

  • are younger than their husband or will reach 60 several years before he reaches 65, or:

  • have already paid full NI contributions for several years before they were married

    Advantages of paying full NI contributions

    Women who pay full NI contributions will gain in five ways:

  • They will be earning rights to the basic state retirement pension independent of any rights they may have which are based on their husband's contributions. That will be particularly helpful if they are older than their husband or less than five years younger than him

  • They will earn rights to the State Second Pension which will be worth at least 1 a week for every year they contribute

  • They will become eligible for jobseeker's allowance if they become unemployed

  • They will be eligible for sickness benefit and incapacity benefit if they are off sick and cannot get statutory sick pay from their employer

  • Their husband will be entitled to bereavement benefits if they die before him and before they have claimed a retirement pension

    What to do next

    First, you should get a retirement pension forecast. You do this by getting form BR 19 either from your local benefits agency office or direct from the website of the Department for Work and Pensions (you can even fill it in online).

    Second, decide if it is worthwhile paying extra contributions for the extra pension you could get.

    Remember when your husband retires you will get a 60% married woman's pension based on his NI contributions and if you are widowed or divorced you in effect get a full pension on his contributions anyway.

    Third, if you want to give up the right to pay reduced NI contributions, get leaflet CA13 National Insurance contributions for Women with Reduced Elections from your local Inland Revenue office and fill in and return Part A of the form CF9 in the back of the leaflet.

    Click  to form CA13

    That will ensure you pay full contributions in future and will be allowed to pay Class 3 voluntary contributions if you choose to do so

    Link to Paul Lewis web site  for more useful articles

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