State pension and divorce: Are you missing out on unclaimed State Pension?

The State Pension is the foundation of many people’s retirement income. Many women will rely on the State Pension even more than men, if they’ve been on a lower income, or have a smaller pension pot due to taking career breaks. And if you’re divorced, it’s even more important to check that you’re getting the correct State Pension. Tony Clark, Senior Propositions Manager, explains why.

What is the State Pension?

It’s a benefit paid to individuals who have reached their State Pension age and have made National Insurance contributions during their working life. This pension is usually paid based on the individual’s own National Insurance contributions. How much you get depends on the number of years you have on your National Insurance record.

From April 2023, the maximum amount of State Pension you can receive went up to £10,600 over the year, or almost £203.85 a week2. The full basic State Pension under the old system (before 2016) was £156.20 per week in 2023-24 for people who have all the qualifying years of NI contributions for their date of birth.3

Why it’s important to make sure you get your full UK State Pension

When you want to retire, a full State Pension could be a key part of your retirement income. It can:

• Provide you with a regular source of income in retirement so you don’t have to rely solely on your savings or investments
• Help you meet your basic day-to-day expenses in retirement, such as food, housing, and energy costs
• Help make sure your money lasts as long as you need it to – especially since many of us are living longer
• Mean you enjoy your retirement without worrying about money, giving you peace of mind.

Am I missing out on unclaimed State Pension?

If you reached your State Pension age before April 2016, and divorced later in life, you could be missing out on unclaimed State Pension. When you think about how long you might be retired for, it could add up to a significant sum over the longer term.

The problem relates to the ‘old’ state pension system. The old system assumed that wives were financially dependent on their husbands, so it allowed women to pay a reduced rate of NI contributions. This means they may have generated little or no State Pension in their own right. Under the ‘old rules’, you could register your ex-husbands’ NI contribution as your own, up to the date of divorce. This often provided a welcome uplift to State Pension income especially since many women had gaps in their own NI contributions, due to raising a family or providing care for others.

In April 2016, the ‘new State Pension’ was introduced, to provide a simpler and fairer State-backed pension in old age.

How can I check?

Checking how much State Pension you’re likely to receive is an important part of your forward financial planning – and you can check here in a matter of minutes. For most people it will be a straightforward check of your NI contributions record. But if you have divorced, you have a little more work to do.

To investigate if you meet the pre-2016 criteria and are entitled to an uplift, you need to make a claim to the Department for Work and Pensions.

When making your enquiries, there are some additional things to bear in mind. If you reach your State Pension age after April 2016, when the new rules were introduced, and you agreed a Pension Sharing Order as part of the divorce settlement – the order may take priority. It’s best to speak to a financial adviser if you’re not sure about anything.

Also, if you have subsequently remarried, or entered into a civil partnership, before you reached your State Pension age, then you can’t claim on your ex-husband or partner’s previous NI record. If you have divorced more than once, the claim rules apply only to the most recent circumstances.

Get in touch

A financial adviser can play a key role during a divorce, providing advice and support. People often turn to an adviser once their divorce settlement is agreed but involving a financial adviser early on means you can take control of your financial wellbeing.

If you need help checking your pension entitlement, get in touch with an adviser who can help you enjoy the retirement you deserve.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and the value may fall as well as rise. You may get back less than the amount invested.

The levels and bases of taxation, and reliefs from taxation, can change at any time and are generally dependent on individual circumstances.

Sources

1Money Saving Expert, Married women missing state pension boost, April 2023
2Government website, gov.uk New State Pension – what you’ll get
3Age UK, Basic State Pension before 2016, April 2023