A Review of Recent Issues Affecting State Pensions

Mark Morton discusses the recent issues affecting state pensions, ahead of our Spring Tax Update courses starting in March 2025. 

For more information on this topic and more, please visit www.mercia-group.com for further details.

Transcript

Hello and welcome to this Mercia podcast. It's Mark Morton here. We're now in the second week of February and I'm still searching for the growth plan. If anybody's found it, please let me know. It's quite interesting. I was asked prior to Christmas by our marketing department, what predictions did I have for the coming year? 

And I have to admit, I'm not a great fan of, Making predictions, because who knows, you know, we know no more than anybody else. But the one thing that I did say was, let's see how many policies the government have to u turn on post the budget, whether that's farmers blockading central London with tractors, or whatever it may be. 

And interestingly, we seem to be seeing a little bit of little bit of change relating to non domiciles. But moving forward interestingly, a lot of talk about pension and state pension and winter fuel and whatever else. And we continue to have a lot of movement, particularly around the state pension. 

And it's something many years ago I was taught by a gentleman who'd had heavy involvement with National Insurance in his career. And learned a lot about state pension, the NRI effects on the state pension and so on and so forth quite early in my career. Then as we sort of moved on as a family we had kids, wife stopped at home responsibilities was a big deal, but I was on top of that as an individual. 

And I think one of the things that has stuck with me over the years, Is the state pension, the game with the state pension, it is everybody's individual obligations to keep on top of their own state pension entitlement. It is not for the state to write to you reminding you to pay contributions, checking with you if you're sure. 

The state's only obligation is when you hit state retirement age, whatever that may be, is to pay you an amount of money based on your contribution history. The problem is most individuals don't understand that game. The waspy women I have mixed feelings about this. You know, women affected by increases in state pension age. 

I think what is interesting when you look at the adjudicators report on this, what is clear is the DWP potentially notified some women but not others and had no record of the people it had notified of the change and the ones it hadn't. So the underlying admin, pretty chaotic you know, going back to the store that doesn't get over the point that it is everybody's individual obligation to keep on top of their state pension entitlement. 

And one of the problems with that particular group of women is if you compensate them, where do you draw the line? You know, I have three missing years of national insurance when I was at university, cause I had no idea, you know, about contributions, not making a contribution voluntary or whatever. I am not in a position to go back those years and pay that up. 

That is my obligation to have kept on top of that. Now, if you compensate the WASPI women, will you compensate me then, please? You know, allow different rules for me. So it's a very difficult situation for that group of people, but it is a slippery slope on current rules. If the government sort of opened the door, you then have the sort of whole issue of more generally state. 

So not just for that group of women of a particular age group, but more generally the increases in state pension age to 66, 67, 68. And of course the extended window to contribute that came along with that. Now for some people. That is irrelevant. For some people it may be really important. One of the issues is understanding what you'll get back for your contribution. 

And nowadays 17 a week is a lot of money. Having said that, of course, if you're going to live to year 112, then it may well be a pretty good investment. But you know, understanding the nature of the contribution, that extended window for people caught up in the 66, 67, 68 sort of increase, That shuts down in April of this year. 

There has been a bit of publicity from the government, the revenue, but not a lot, if I'm honest. You know, and if you don't understand the point, will you even see? The third issue that comes along is deficiencies more generally. Once that extended window closes, we'll be back to a regime where you can generally only go back and pay up, Six years of deficiency, but again, how do you know if you're deficient? 

My wife, over her working life, has received one letter from HMRC, DWP, once upon a time, probably about 15 years ago, saying, Which was after the last scandal where somebody said in parliament, you're not telling anybody about the deficiencies, you know, she got a letter with the greatest respect. She probably had, didn't know, didn't care too much about what it was saying. 

Rather strangely, she was sent that letter when she was entitled to her own responsibilities anyway. So why would we have contributed when we were getting free years? And I think all you see is this continuing complexity, a lot of court cases whereby people are reaching state retirement age they are expecting a full state pension, they do not get that and then they start to question why. 

And the other interesting thing that's going on at the moment is, again I've already touched upon this, home responsibilities protection. The revenue again, the government are highlighting the fact that prior to the year 2000, If you claim child benefit, you are not obliged to put your national insurance number on the child benefit claim form. 

Which means of course, theoretically, although you might be entitled to a contribution, a notional credit you may not have got it. Now the DWP say that they are working through cases and adjusting and they found 5, 000 people. I think based on previous history, can you rely on the government, the DWP, the revenue or whoever it is? 

to sort this out for you. No, you cannot. Ultimately, we're in a position at the moment where it has never been as easy to start the ball rolling with state pension, log on to your personal tax account. If you know you've got one, of course, look at the summary of NI contributions and history. If you find it and if you understand what it's telling you and if it doesn't look right start to pursue the issue But there are all sorts of things going on with state pension. 

It has always been complicated And I think the issues i've just touched on briefly are merely a reflection of that historic complexity So anyway, good luck on delving. And of course, if you'd like to speak to me about this, I will be out and about online and in person presenting Spring Tax Update. Hopefully I will see you in March or April somewhere whether it be online or in person. 

Take care, everybody.