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State Pension Age – Guidance, or the lack of it, on 10-year equalisation process

Friday, March 19th, 2010

Between April 2010 and April 2020, the state pension age for women will rise from 60 to 65. By way of reminder, the effect of this change, which has been in legislation for many years, is that women born

before 6 April 1950 will be able to claim their state pension at age 60
after 6 April 1955 will be able to claim their state pension at age 65
between 6 April 1950 and 5 April 1955 will have a state pension age between 60 and 65, depending on their date of birth.

There are 120 months in the 10 years that this process will be in place and the state pension age has to increase by 60 months in that period, from age 60 to 65. So, as each month goes by, a woman will reach state pension age a multiple of months later than she would otherwise have done. For example, if a woman’s 60th birthday is on or after

6 April 2010, her state pension date is up to one month later, on 6 May 2010,
6 May 2010, her state pension date is up to two months later, 6 July 2010,
6 June 2010, her state pension date is up to three months later, on 6 September 2010,

and so on. The full timetable is as follows:

Born between	1950/51	1951/52	1952/53	1953/54	1954/55
6/4 – 5/5	6/5/10	6/5/12	6/5/14	6/5/16	6/5/18
6/5 – 5/6	6/7/10	6/7/12	6/7/14	6/7/16	6/7/18
6/6 – 5/7	6/9/10	6/9/12	6/9/14	6/9/16	6/9/18
6/7 – 5/8	6/11/10	6/11/12	6/11/14	6/11/16	6/11/18
6/8 – 5/9	6/1/11	6/1/13	6/1/15	6/1/17	6/1/19
6/9 – 5/10	6/3/11	6/3/13	6/3/15	6/3/17	6/3/19
6/10 – 5/11	6/5/11	6/5/13	6/5/15	6/5/17	6/5/19
6/11 – 5/12	6/7/11	6/7/13	6/7/15	6/7/17	6/7/19
6/12 – 5/1	6/9/11	6/9/13	6/9/15	6/9/17	6/9/19
6/1 – 5/2	6/11/11	6/11/13	6/11/15	6/11/17	6/11/19
6/2 – 5/3	6/1/12	6/1/14	6/1/16	6/1/18	6/1/20
6/3 – 5/4	6/3/12	6/3/14	6/3/16	6/3/18	6/3/20

There are obviously unusual NICs issues for employers to handle during this period as the Table letter for female employees will have to change, not from their 60th birthday, but from their new state pension date.

We wrote to HMRC in January this year asking

if there were any plans to provide employers with more guidance than was currently available in Employer Bulletin 33, published in September 2009 (link below), and
whether the date shown on any Age Exception Certificates issued to women affected by this change will be the date specified in the legislation as the date that a woman reaches her new state pension age rather than her birth date.

The Employer Bulletin article, entitled State Pension age (Spa) is changing between 2010 and 2020 made the following points:

Between April 2009 and January 2012, the Pension Service will write to all women affected by this change to advise them of their new SPa date and provide them with some general information about the Pensions Reforms. Some of your employees may be included in the mailings.

Currently, employees who are over SPa (60 for women and 65 for men) do not have to pay employee’s National Insurance contributions (NICs). The employer however has to pay Class 1 category C rate NICs.

As the SPa for women gradually increases, you will need to deduct, record and pay both employee and employer Class 1 NICs for women over the age of 60 up to their new SPa.

You will need to ensure that you have accurate dates of birth for all of your employees in order to determine when they no longer need to pay Class 1 NICs because they have reached SPa. The [2010] edition of booklet CWG2 – Employer further guide to PAYE and NICs – (page [66]) gives further information, including the types of proof that you can ask your employee to provide.

Class 1 category C rate NICs (employer only) will only apply to employees working beyond their SPa.

In response to our questions, HMRC stated:

HMRC will be publishing a further article on the equalisation of women’s State Pension age in the Employer Bulletin. This will be due to be published in April. This guidance will give specific details of the revised State Pension ages according to the woman’s date of birth. We also point the customer to the State Pension age calculator on the Directgov website. This enables the customer, whether male or female, to work out the date when they can expect to retire, by entering their date of birth.

A similar article is planned to be published in April 2011′s Employer Bulletin.

Also, at the moment consideration is being given to whether our HMRC website should be updated to include the full equalisation of State Pension age table or whether we are providing enough information by pointing the customer to the State Pension age calculator. A decision has not been made on this as yet.

There won’t be any further guidance, apart from the Employer Bulletin, published to advise payroll offices.

DWP will issue letters to approximately 1.9 million women in a phased approach over the period April 2009 to January 2012. This letter will advise them of their new State Pension age. Those who reach State Pension age first (i.e. those who reach SPa in 2010) will receive their mailing first.

As the part of the changes in Pensions Reform Equalisation and Extension project (01AK), we issued guidance to the business to advise them of the changes. From this, I can confirm that the customer’s (new) State Pension age will be entered on the Age Exception.

The information for individuals provided by The Pension Service on the Directgov website is quite comprehensive and includes the state pension age calculator referred to by HMRC. In contrast, the guidance provided for employers on the Business Link is negligible, although it is understood that some material is under preparation.

The state pension age calculator may be of use to an employer if there are few women in the age group who will be affected. Otherwise, a routine computer report is going to be more helpful and it is likely that some payroll software developers already have one available. Ideally, it should list, in date order, the names of those employees who will reach their new state pension age on the 6th of May, July, September, November, January and March each year during the 10-year period, allowing the employer to contact each employee in plenty of time to obtain evidence of date of birth or an Age Exception certificate.

Further information:

Employer Bulletin 33 – September 2009

Changes to the State Pension age

State Pension age calculator