Part 5 – State pensions
125.Part 5 makes provision about a person’s entitlement to state pension based on a current or deceased spouse’s or civil partner’s National Insurance record. This entitlement is payable by way of a “Category B pension” under the Social Security Contributions and Benefits Act 1992.
126.Under section 48A of that Act, a married person or civil partner may be entitled to a lower-rate basic state pension based on the spouse’s or civil partner’s National Insurance record while the spouse or partner is alive, and up to a full basic pension and a proportion of the spouse’s or civil partner’s additional (earnings-related) state pension after their death. However, for married men and civil partners, entitlement is restricted to those whose wives or partners were born on or after 6 April 1950. Paragraph 11(1) replicates this restriction for a person who is married to a person of the same sex. However, paragraph 11(2) provides that the restriction does not apply to a woman married to another woman whose spouse was her husband immediately before obtaining a gender recognition certificate. In this situation, she would retain entitlement to state pension based on her spouse’s National Insurance contributions, even if the latter was born before 6 April 1950. Paragraph 11(3) amends subsection (2ZA) of the Social Security Contributions and Benefits Act 1992, which defines which contribution condition the person’s spouse is required to satisfy depending on when he or she reaches state pension age. The amendment clarifies that the condition applicable to a person who reached state pension age before 6 April 2010 can be relevant only where the spouse is a man married to a woman or (as provided by new (2ZA) and (2ZB)) had been born a man who would have reached pension age in her birth gender before that date.
Examples
Sandra (born 1949) and Mary (born 1951) get married. Mary only came to live in the UK in her forties and had built up only 50% of a full basic state pension, worth £55.07 a week at current rates, by the time she reached state pension age in March 2013. This is £10.93 less than the full standard rate of basic pension for a married person or civil partner (£66). As Sandra was born before 6 April 1950, when the couple marry Mary will not be able to have her basic state pension increased to £66 using Sandra’s National Insurance record.
Stephen (born in 1949) and Michelle (born 1951) married in 1980. Michelle did not return to work after having their children and is entitled to only 50% of a full basic state pension on her own contribution record. When Stephen qualifies for state pension in 2014, Michelle will be able to have her basic state pension increased to £66. Stephen (now known as Stephanie) is granted a full gender recognition certificate, and the couple remain married. Although Stephanie was born before 6 April 1950, Michelle will remain entitled to the £10.93 top-up she receives from Stephanie’s contributions as this is what she would have been entitled to had Stephanie not obtained a gender recognition certificate.
127.Under section 48B of the Social Security Contributions and Benefits Act 1992, a spouse or civil partner who is widowed over state pension age(1) may be entitled to a Category B pension comprising basic pension plus a proportion of the deceased’s additional (earnings-related) state pension. Widowers and surviving civil partners cannot qualify under this provision if they reached state pension age before 6 April 2010. Instead, they may qualify under section 51 (see below), provided their late wife or partner died when also over state pension age. The practical effect of this restriction is now limited to instances where the widower or surviving civil partner reached state pension age before 6 April 2010 and the deceased spouse or partner dies while still under state pension age. The restriction, in relation to widowers, is made by paragraph 3(3) of Schedule 4 to the Pensions Act 1995, which will be read as applying to widowers of marriages of same sex couples by virtue of section 11 of this Act. Paragraph 12(1) of Schedule 4 applies an equivalent restriction to women married to women. However, paragraph 12(2) exempts from this restriction women whose female spouses were formerly their husbands. Paragraph 12(3) makes provision corresponding to that made by paragraph 11(3) relating to the applicable contribution condition to be met by the deceased spouse.
128.As noted in the previous paragraph, section 51 of the Social Security Contributions and Benefits Act 1992 provides a Category B pension for a widower or surviving civil partner who reached state pension age before 6 April 2010 and is widowed when both members of the couple are over state pension age. Section 51 does not apply to widowers or civil partners who reach pension age on or after 6 April 2010, as that entitlement is picked up by either section 48A or 48B. Paragraph 13(2) of Schedule 4 inserts a new subsection (1ZA) into section 51 of that Act, which extends it to include the surviving spouse of a marriage of a same sex couple, so that it may provide a Category B pension where the survivor’s pension age is before 6 April 2010 and both are over pension age at the date of widowhood. Paragraph 13(5) and (6) provide that this does not apply to surviving spouses who reached pension age on or after 6 April 2010 or to women whose female spouses were formerly their husbands as they will qualify under either section 48A or 48B.
129.Apart from the above elements of derived entitlements, a surviving spouse or civil partner may also be entitled to half the deceased’s graduated retirement benefit (GRB) – a form of earnings-related pension that could be accrued between 1961 and 1975. Widowers and surviving civil partners who reached state pension age before 6 April 2010 may inherit GRB only if both parties are over state pension age when the spouse or civil partner dies. The provisions for GRB inheritance are in section 37 of the National Insurance Act 1965. Section 62 of the Social Security Contributions and Benefits Act 1992 provides the powers to amend the GRB provisions. Paragraph 14(2) of Schedule 4 inserts new powers into section 62 to enable regulations to be made extending section 37 of the National Insurance Act 1965 to men and their late husbands and to women and their late wives on the same terms as currently apply to widowers and surviving civil partners. Subsections (3) and (4) have the effect that a woman who was married to a transsexual woman remains entitled to half the GRB of the deceased without restriction – as if her spouse had not changed legal gender.
Examples
Teresa (born in 1949) and Angela (born in 1954) get married. Angela would have reached state pension age in 2020 but she dies in 2019. She had built up £20 additional (earnings-related) state pension in the current state pension scheme. The maximum inheritable amount would be one-half, but as Teresa reached state pension age before April 2010 she will not be entitled to inherit any of Angela’s additional state pension. However, under separate rules that apply equally to widows, widowers and surviving civil partners, if her own basic state pension is less than the full rate of £110.15 (at current rates) she may still be able to have this increased up to the full rate, using Angela’s contributions(2).
Sarah (born in 1949) and Richard (born in 1955) married in 1990. Richard (now known as Ruth) is granted a full gender recognition certificate and the couple remain married. However, Ruth dies in 2020, before reaching state pension age in 2021. She had built up £40 additional state pension and £1.50 GRB in the current state pension scheme. Although Sarah reached state pension age before April 2010, she will still be able to inherit half Ruth’s additional state pension and GRB, as this is what she would have been entitled to had Ruth not obtained a gender recognition certificate.
130.Adult dependency increases (ADIs) are an increase of state pension that could be awarded under sections 83 to 85 of the Social Security Contributions and Benefits Act 1992 and may be payable to a man in respect of a dependent wife; a wife in respect of a dependent husband; or a person in respect of another adult (not their spouse) who has the care of the pensioner’s dependent child. ADIs were abolished from 6 April 2010, but people who were already entitled to an ADI before that date continue to receive it under transitional rules. Under the changes which the Act introduces, a married couple will be able to remain married when one member changes their legal gender. Paragraph 15 provides that an adult dependency increase continues to be payable where the parties to the marriage are still married but no longer husband and wife.
131.Paragraph 16 provides that where a couple have converted their civil partnership to a marriage under section 9 of the Act, this cannot give rise to entitlement to state pension by virtue of being treated as married in the period preceding the conversion.
Section 48B also makes provision for Category B pension for a spouse widowed under state pension age before 9 April 2001. Entitlement to Category B pension for a married person or civil partner widowed under pension age on or after that date is dealt with under section 48BB.
Under the Government’s proposals for reforming the state pension, a person who reaches state pension age before the reforms are introduced in April 2016 will still be able to qualify for the state pension based on the contributions their spouse or civil partner made into the current scheme, under the current rules.
