Clauses 11 and 12, and schedules 6 and 7, deal with the group of women—it is exclusively women—who paid what is colloquially known as the married woman’s stamp; that is, the reduced rate election. The married woman’s stamp had its origins in the post-second world war national insurance system, whereby women could pay full national insurance and build up a full pension, but the presumption was that a married woman did not do so and that she paid a reduced rate of national insurance. That meant that she did not build up a state pension in her own right, but she did build up entitlement to a pension based on her husband’s contributions when he reached state pension age, typically of a 60% pension as a married woman or of a 100% widow’s pension when he died.
As the hon. Member for Edinburgh East said, this was not a minority sport at all. I think that, at peak, there were between 3 million and 4 million married women paying the married woman’s stamp; it was what many women did. I have had plenty of letters from people who said, “I came back off my honeymoon at 19 or 20. The man from payroll came round, had a look at my photos and said, ‘Sign this, love.’” That was the way a lot of this was done. There is plenty of argument about whether anyone would ever do anything like that these days, but we must deal with the legacy.
This is a very clear case of where the state entered into a contract with individuals and a deal was done. The deal was, “You put less national insurance into the system, you don’t build up your own pension, but you do get something on your husband’s rights.” We just felt that, although in a sense the option to pay the married woman’s stamp for new people ended in the late 1970s, there was one heck of a legacy of all this. Lots of people even now are coming up to pension age who, at some point, have paid the married woman’s stamp.
Clause 11 relates to the people who have got something in their own right; clause 12 relates to the married women who paid the married woman’s stamp who have got nothing at all. What these clauses and schedules do is essentially to try to replicate what those people would have got. In a sense, it is cleaner, because if they have got nothing at all we just pay them what they would have got—the 60%, or the 100% in due course. If they have got something, we have to mesh together the something that they have got with the extra amount that we will give them, which is why we have done them separately. However, as I think the Committee would consider was proper, what we have basically said is, “If, at your state pension age, you had a live election to pay the married woman’s stamp at any point in the preceding 35 years”—so we have been pretty comprehensive in this, because there is a 35-year rule for the pension and so we thought that 35 years was not arbitrary and was a reasonable period—“you’re in this concessionary basis and essentially you will get the pension you would have got when your husband reached state pension age, because you are on his record as a married woman, and in due course if he predeceases you, you get the basic widow’s pension that you would have got.”
This is one of those trade-offs. This clause adds complexity to the Bill—I entirely accept that—but we just felt that the balance of complexity and fairness for this group of people, for whom there was such an explicit contract between the state and the individual, led us in the direction of complexity. There are not huge numbers of people involved, but we felt that we would be on pretty shaky ground if we tried to rip up that contract right at the end of their working life.
Those are my remarks about clauses 11 and 12, and schedules 6 and 7. Obviously, I am very happy to answer any questions and to hear any responses.
I thank the Minister for that explanation. I was struck by what he said about the 35-year period. The Opposition do not oppose the clauses and welcome the Government’s recognition of the explicit contract between the individual and the state, which is the legacy of a very different social and employment environment. Has the Minister estimated how many individuals will have paid the reduced rate election outside of the 35-year period that the Government have set? Does he think that is a significant issue?
Generally, we welcome the Government’s approach. The Minister is right that it adds a little complexity. Complexity is to be deprecated where it can be avoided, a point that he has made on a number of occasions, but like him we think that, given the circumstances in which the reduced rate election was paid, it makes sense to proceed as the Government suggest. We support the clauses; I simply ask whether there are any issues with taking into account only those people who have made reduced rate election contributions within the previous 35 years.
We estimate that the number of women reaching state pension age in the single tier who have ever had a reduced rate election is about 80,000; we estimate that the number with a current or lapsed reduced rate election who would get less than in the current system if we did not have these measures is about 16,000. There are about 60,000-odd who once paid a reduced rate election and have not yet retired, but who will get more. The fact that their contributions fall outside the 35-year limit means that they have had another 35 years since the reduced rate election lapsed to do something about their situation; they will also have made contributions during the years before they were married—essentially, there has been plenty of time for them to do something about their pensions.