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Paul Lewis: The NI sting depriving 1950s women of their state pensions

Evidence suggests they have been cheated by successive governments’ mishandling of the NI Fund

Have women born in the 1950s been short-changed? Of course they have. Their state pension age has been pushed up from 60, the age they expected to retire for much of their working lives, first to 65 and then, for most of that cohort, to 66. That has left a massive hole in their financial planning as they struggle to find or keep work at a time of life when doing so can be very difficult.

They face individual losses of tens of thousands of pounds from what they expected to get and which they believe they have paid for over 40 years of working and paying taxes.

They also object very strongly to losing the benefits associated with being of state pension age, such as free bus travel.

Nor can they claim pension credit, which can boost the income of a single person to £163 a week. The alternative is jobseeker’s allowance of £73 a week, which requires genuine job-seeking.

Now campaigning journalist David Hencke says they have been cheated in another way. In a discovery worthy of Indiana Jones, he has unearthed an ancient manuscript on a dusty website that has not been updated or looked at since it was put there 12 years ago. It was written by policy guru Tony Lynes, who sadly died in a road accident four years ago at the age of 85.

Paul Lewis: Investing in gold

From the grave, he has given new energy to the BackTo60 campaign. This is the new group of 1950s-born women who want the entire pension age rise reversed – as has happened in Poland.

Lynes’s paper, The Rape of the National Insurance Fund, shows that potentially hundreds of billions of pounds have been taken from the fund by successive governments.

Having done that, they claimed there were insufficient resources in it to pay for an increase in the basic state pension.

Lynes wrote the paper for Southwark Pensioners Action Group, part of the radical National Pensioners Convention, which was calling for such a rise.

The Government Actuary’s latest report says the income of the fund will be around £106bn in 2018/19. That comes from the National Insurance Contributions people in work and their employers pay. Out of that, the state pension will take the lion’s share of £96bn. The rest goes on contributory benefits for people who are sick, bereaved, new mothers or newly unemployed and those made redundant. Almost £1bn goes on administration and “miscellaneous”. This year, the fund will take in around £2bn more than it pays out.

Lynes says – and it is borne out by other documents I have found – that when the fund was set up in 1948 its income from contributions was boosted each year by a Treasury supplement. In 1973, that was fixed at 18 per cent of its contribution income. So NICs only paid for part of the benefits the fund provided and did not pay anything for administration.

Lynes reveals that, in the 1980s, that Treasury supplement was cut from 18 per cent to 5 per cent and was finally abolished in 1989.

That was affordable because, from 1978, NICs changed from flat-rate to earnings-related. As they rose with earnings, the benefits paid out increased only with prices, so the fund could pay its own way.

In years it did not, there was provision for an ad hoc Treasury grant. That has been paid occasionally but the Government Actuary has no expectation of a further one until 2023 at the earliest.

Lynes also explains that, between 1996 and 2002, three green taxes were imposed on businesses.

In return, employers’ NICs were cut. So the fund in effect paid for these green taxes, which Lynes reckoned cost it £2bn a year. Then, in 2002, the government added 1 per cent to all NICs to boost the money paid to the NHS. But in an arithmetic sleight of hand, the NHS got around £1bn a year more than the extra contributions that were paid.

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Hencke estimates the lack of Treasury supplement has cost the fund £271bn. However, the actual figures in the fund’s accounts show replacing the Treasury supplement with ad hoc grants has denied it a net total of £310bn since 1981 when the supplement was first reduced.

A slightly less firm estimate of the total cost to date of the green taxes diddle and the NHS fiddle adds perhaps another £70bn. With the interest these surpluses would have earned, the fund is probably around £400bn lower now than if all those things had never happened.

That is a staggering sum for a fund which the Government Actuary predicts will have a balance of just £26bn at the end of this year.

Hencke says it calls into question the need for the rise in women’s state pension age at all. The cost of compensating all 1950s-born women has been put by pensions minister Guy Opperman at £70bn. Hence the new energy in BackTo60, which it badly needs.

The first group campaigning for the 1950s-born women – the Women Against State Pension Inequality – has been riven by more schisms than the early Christian church, achieving no change in the pension age rises nor compensation for those affected. Now women are rallying around the proof as they see it that the change was not even necessary. It merely filled the gap left by successive governments through their – to use Lynes’s word – “rape” of the National Insurance Fund.

Paul Lewis is a freelance journalist and presenter of BBC Radio 4’s ‘Money Box’ programmeYou can follow him on Twitter @paullewismoney 



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There are 43 comments at the moment, we would love to hear your opinion too.

  1. Answer = GENDER EQUALISATION + a Boiler House NI “fund”

    They couldn’t drop a guy’s SPA, as it would cost a fortune and with the Boiler House NI fund, there just isn’t the cash there, so they’ve had to up a Lady’s SPA to make it FAIR.

    This could all be undone when we finally leave the EU of course!

    • Suzanne Albright 4th October 2018 at 1:54 pm

      The EU has nothing whatsoever got to do with our NI Fund or our state pensions. Nor is the NI Fund a boiler house scam.

      • The EU (the EU Gender Equality Law, if you’d like to look it up) has everything to do with the Gender Equalisation ruling that led to the equalisation of male and female State Pension Ages.
        Today’s incoming cash, being used to pay out today’s liabilities with little or no resources in the background (“Fund”), is a Boiler Room Scam. It’s nothing new, there are many many comments on here going back years where this has been mentioned.

      • Simply because the EU Ruling was later than the Pensions Act, doesn’t mean that the powers at be didn’t know it was coming. And we can’t unpick it, until we’ve left and have full control back.
        Personally I would pay more NICs so that my Mother could retire when she expected to, but it should be about Equality, across the board and the SPA is a fine example of inequality that has no place in the 21st century.

    • It’s clear you don’t know the difference between a ‘boiler house scam’ and a Ponzi scheme. However, neither applies in this case as there IS a NI Fund. Under Section 162 of the Social Security Administration Act 1992, NICs received by HMRC are paid into the NIF. And here are the accounts.

      The idea that Brexit will lead to the undoing of current pension legislation is even more laughable than your boiler room idea.

  2. I’m not sure which is the more contrived assertion – that governments have pilfered £271bn from the National Insurance fund, or that 1950s women should be the primary ones to benefit from this.

    If we go along with the “NI sting” notion, then the obvious victims are those pensioners who only received inflationary increases rather than linked to earnings, and future generations who will have to deal with a depleted NI fund at the time when the dependency ratio puts a potentially unfeasible burden on workers.

  3. Amazing that neither the Turner nor Cridland unearthed this gem?

  4. Nicholas Pleasure 4th October 2018 at 11:46 am

    “They face individual losses of tens of thousands of pounds from what they expected to get and which they believe they have paid for over 40 years of working and paying taxes.”

    Men paid the same NI rates so we should get the same pensions at the same date as women. The difficulty for these women is that in the age of equality, it is very tricky for them to make a case that they should be treated unequally.

    Therefore they should be campaigning for the SPA for men and women to be reduced to 60. That is only fair and the only way that the government could legally offer age 60.

    Not that they can afford it though.

  5. The problem I have in all of this, is those same woman were fighting for equality and equal opportunity throughout those years, but now massive strides have been made, and the fight continues, suddenly they seem to want their cake and to eat it too.

    • No I don’t think so Andrew Horlock, I just want what is rightfully mine nothing more nothing less.Women still do not have equality with men this is because of inequalities we have lived with and through, our entire working lives. We have been targeted yet again a cohort of 50’s women who have to lose their pension in the name of Equality…. I think not. Maybe its you who wants the cake and get it to eat it too.

      • @ Cheryl – can you please explain how 1950s women have been “targeted”, when all women born after 1950 have had their state pension age increased, and 1960s women have had more increases and a higher state pension age than 1950s women?

        • Realise this is a little late !!. But in answer to your question. Maybe “targeted” is not the correct word to use here. But lets get on with the answer.
          The 1995 Act came in and quite simply we were never informed, so that act would equalise the SPA for men and women to 65 by 2020. It would not start happening until the year 2010, so 15 yrs notice, fair enough, we could probably make adjustments financially to cushion the blow. BUT WE WERE NEVER TOLD.

          • sORRY hit the wrong button. We WERE NEVER TOLD. Then in 2011 the next act came in this accelerated our SPA even quicker. It only affected those born after APril 5th 1953 but after some adjustment those women were hit with another increase in SPA and we were then alarmingly close to 60 (remember this was our expected retirement date).Example if you were born Nov53 a futher increase of 17 months added , so that took this persons increase to 5 years, from 60 to 65. In 2012 when we notified of the 2011 act many women were only 18 months away from their retirement date of 60. This was a catastrophe !! as women did not know of the 95 act either !. This only happened to 50s women so hence the word targeted. This whole thing is not about the ACTs themselves but the mannner and the unjust unfair way they have affected 1950s women. I could bore you with our workign life time story of inequality in the work place throughout most of our working lives and how that too has impacted on 50s women, but I guess you won’t want to hear that. One final point, I have paid my NI for 45 yrs I have 38 complete years, more than enough to qualify, yet I am now having to live off my husbands pension……degrading and disgusting….but I’m lucky some women do not have the support of a partner. WHY should I be put ?in that position ? WHY should this government think it acceptable to rob me of my pension.

  6. Trevor Harrington 4th October 2018 at 11:59 am

    Whichever way you dress it up, large amounts of the NICs that the public (voter) has paid over many years have been used for various political agendas, by both pink and blue governments – this has been done, rather than using our NICs to maintain, secure, or equal out the State Pension Benefit over the years of fluctuating demographics in this country.

    In other words – successive Governments, of all political persuasions have spent our money (NICs) on things other than that to which they were intended.

    In the current World, where there is a reluctance, or indeed a stark refusal, by all politicians to talk about the reality of what we want and need as a community, compared to what we can actually afford, there was bound to come a day when the very basics of democratic society and social justice in our lives was obviously going to fail catastrophically.

    Sounds good doesn’t it?

    What I am saying is that successive Governments, but particularly the Labour Government of 1997 / 2010 have spent your (our money) money on their own pet political projects, presumably in an endeavour to maintain power.

    Only when we as a nation, a public, and particularly our leaders (politicians) STOP to ask “CAN WE AFFORD THIS” or indeed “WHERE IS THE MONEY GOING TO COME FROM TO PAY FOR IT” will we be able to afford all the social benefits that we so desire, notably state pensions, health care, and proper care for the elderly.

    Interestingly, if we ever arrive at that point where the costs of new legislation are properly and accurately costed for … we shall then see that there is virtually no difference between the political parties as they will all simply want the best for the people.

    • Suzanne Albright 4th October 2018 at 1:59 pm

      What evidence do you have that even a penny of the NI Fund was used ” for various political agendas”? How much was used for what, and when?

      • Trevor Harrington 4th October 2018 at 2:37 pm

        They have had it – NICs paid, including the excess payment for SERPS, which we are no longer going to receive.

        We have not had it – State pension entitlement has NOT been maintained, it has been reduced, and the state retirement age has been increased.

        They have spent it – The country has only just managed to balance the budget deficit (we are nearly getting as much tax in, as is being spent on an annual basis), and we currently have a national debt of £1.9Trillion, which is the equivalent of an individual like you and me of having an overdraft of 2 x total gross annual salary !!

  7. Surely the action group should be called WIFOSPY. Women In Favour Of State Pension Inequality.

  8. Evidence also suggests that this is a sexist and vexatious complaint.

  9. The point was that women of that age stream had little or no time to adjust to the extended term of six years having had it announced in their middle tomato 50’s. it would be equal in destructive force if mens had been put up to 71 rather than 66. It is not an argument on equality of sex but one of justice of decision against a sex of a particular age.

    • Factcheck….

      No woman (or man) has had a single extended term of 6 years announced in their mid 50s. The bulk of the increases were first announced in 1993 (on live television), when the oldest of those affected would have been 43.

      Men’s state pension age has been increased anywhere from 65 to 68 depending on date of birth.

      The “particular age” and “women of that age stream” argument is fundamentally flawed. All men born after 1953 and all women born after 1950 have had their state pension age increased. It’s a universal issue that affects everyone born after certain dates.

      In order to achieve equal state pension ages, women’s age had to increase by 5 more years than men’s. This is because women’s state pension age was 5 years earlier. Whenever and however they did, the common denominator would be a 5 year bump in women’s SPA relative to men.

      • “The bulk of the increases were first announced in 1993 (on live television)”

        What a weedy excuse that is Mick. So you are saying, basically, If you missed it then, “Tough, get over it”. No private company could get away with that. What sort of a country do you want to live in?

        If I was a client I wouldn’t want to do business with any adviser who thought that would be a fair way to treat me. And there seems to be a lot of them.

        • @ Patrick

          It’s a statement of fact, not a “weedy excuse” (whatever that means).

          The original comment said “having had it announced in their middle tomato 50’s” (sic). This is evidently not correct; as the first changes were announced as part of the 1993 budget speech.

          Whether this and other attempts at communication were sufficient is of course a matter for debate, as is what we can now do about it a quarter of a century later.

          Unfortunately, some people do not want a rational debate on this; they just want to make unqualified claims, make bizarre inferences, and build strawmen.

    • Thank you Gary Scott I see you have done some homework on this. Thats it in a nutshell. I was never told by the DWP until it was too late and I actually knew about it then. The year was Feb,2012.
      I had a letter from the DWP in 2005 and it began
      “Have you thought about how much you might receive when you retire ? BECAUSE women often have less than Men !!! through caring duties etc. The shocking thing is nowhere in that letter did it say OH and by the way you have a new State pension Age which is 63 yrs 5 months. So I never even thought my pension age had changed why would I it had always been 60. Then in 2011 they moved me again another additional 17 months making a total of 5 yrs extra wait. I was 58 yrs old then and 18 months off my 60th Birthday when they actually informed me of Both ACTS. That is what is totally unfair and unjust. You men who keep complaining should be supportive as you too are affected as I have no other alternative but to live off my husbands pension. I have over 40 odd yrs f NI contributions. I feel grossly cheated.

      • From the description, the 2005 letter seems like part of the Automatic Pension Forecasts that were sent unprompted around that time.

        The letters did not include details of state pension ages. However, the letter was accompanied by a leaflet that did, according to FOI requests.

        Did you get a leaflet with the letter, and if so did it contain any reference to state pension age rises?

        • I honestly can’t remember if I got a leaflet. However to me quite honestly successive governments did not what to advertise the Sate pension Age change so they are all guilty. Why hide such important information like that in a leaflet. Wouldn’t you expect it in the main body of the letter. There is absolutely nothing in the letter to suggest an age rise….so why would I look in the leaflet. I would only look in the leaflet if I had a problem with what they were telling me in the letter. So I was on track for a full pension and extra State pension so all looked fine.

  10. I seem to remember that the announcement was made during the budget speech of 1988 that the state pension age was to be equalised by the simply method of raising women’s retirement age by 1 month every 2 months, therefore equalising ages at age 65 from April 2020. This was what I taught many new recruits into this industry at this time. From my knowledge it is therefore apparent that the information about the raising of the pension age was available at least 20 years before it was implemented, and in many cases in excess of 30 years. The problem has largely arisen simply because of the average member of the public not bothering to make enquires or even request a state pension forecast.
    What there was substantially less notice about, was the general raising of all retirement ages and specifically the effect of removing of many previous accrued benefits such as graduated pension benefits and SERPS benefits, all this after the general advice we were encouraged to give was that older lives should be opted back into SERPS (if they had opted out); again I remember that this was Government advice. From pension review work in the 1990’s I also have a recollection that opting out of SERPS was a consideration. Therefore, have numerous individual been misadvised by the state, and should therefore be eligible for compensation for mis-sold pensions? Or would the normal position arise where we in the finance industry would be held responsible as we normally opted the individuals back in?
    The reality is that we are all aware that National Insurance contributions are simply taxation by a different name and that the state simply cannot afford to do anything other than to continue to raise pension ages for all, and simple equality dictates that the age for both sexes should be the same.
    I also note that the average individual will continue to draw their state pension for many more years than the previous generation would (and that the average woman will continue to draw her pension for longer than the average man) therefore we must expect, and indeed want, the state pension age to continue to rise as average life expectancy rises (I am obviously aware of the present blip where life expectancy has not continued the recent trends).
    I write this as an individual who has seen his state pension forecast drop by £ thousands per annum and is affected by all the issues raised in the second part of this note.

  11. Excellent article, Paul. Thank you very much. The point is that there was no need to raise the pension ages at all. As a 1961 born woman I see that quite clearly as I am not included in the 1950s womens campaign but I actually suffered the same fate, but even worse as have had 7 years added to my SPA. No notice, no debate just a huge hike and break of a social contract with the British Government. Nye Bevan would be turning in his grave.

  12. I am one of many 1954s woman also a WASPI, hit by the change in SP.
    GARY SCOTT. totally agree with your comments.
    I am in the same situation, no notice, paid in 41yrs.
    Woman have lost there homes/health.
    Rest assured the money is there,government would rather pay for overseas project’s to make themselves look good to the outside world anything but us.
    Why would they care? we have as taxpayers paid into large private pensions over the years for them so they can retire when they want.They don’t need to wait for there SP.
    Deeds not words

  13. Every time there is an article about WASPI women there is a huge outflowing of mysogyny from advisers, for one reason or another. Women still don’t have true equality and you can see why, from many of these comments.
    Gary Scott has it right. Many women were NOT well informed about these changes. Some also would not have understood them, for one reason or another (women, or men, SHOULD NOT be punished for being poorly educated or for lacking intelligence).

    Successive governments should be ashamed at their poor behaviour and anybody that thinks women have been treated well need to have a good think about ethics.

    Thankfully I am not the only male that is prepared to stand up for females. Where would we be without them?

  14. The argument that the state pension increases should be reversed for 1950s women makes no sense at all. If you follow it through to the logical conclusion, you end up with a horrendous cliff-edge between someone born on 31 December 1959 and 1 January 1960, where suddenly the state pension age increases from 60 to 66.

    In order to address this, women born in the 60s would need to be subject to either tiering (which would lead to the same WASPI-esque arguments we keep seeing) or equalisation, in which case the problem extends to the 70s, 80s, etc. Then you have the issue of gender inequality. The ultimate result of this would be the need to pay everyone, male or female, a full state pension from age 60, with average life expectancy meaning payments for around 24 years (currently) on average for all former taxpayers.

    If life expectancy continues to increase, this clearly becomes unsustainable fast unless you tax the current workforce significantly more, and given the average person in that generation already struggles to buy a house before turning 40, that’s likely to be a very poor choice politically.

    It can’t be fun to find out that your state pension age increased decades ago and you missed it, but the increase is necessary for fairness and probably affordability as well.

  15. I see Paul is stirring yet again.

    So let’s assume people such as Paul or WASPI or anyone else who wants a slice of a cake that doesn’t exist gets their way.

    Who is going to pay for it?

    I find it utterly amazing that so called experts such as Paul and half those commenting on this article fail to grasp the simple concept that the government doesn’t have one single solitary penny of it’s own.

    The ONLY money the government has is what it steal from us in the form of tax (whether it’s called tax or NI or anything else).

    So who is going to pay for all this?

    The answer is very simple and it’s the younger generations.

    Then many of you gripe and moan when they say that those of older generations are selfish and have had massive benefits that they never paid for and now expect their children and grandchildren to pay for.

    Whereas the reality of the situation is very simple. You are 100% hypocrits, as is Paul.

    You moan about all these things that were done by governments YOU voted for…. there is no magic money tree to pay for it all, no instead, you seem to expect the younger generations who already pay vastly more tax than you ever did at their age to pay for it.

    In effect you’ve maxed out the credit cards and now expect your kids and grandkids to foot the bill.

    I’m more than slightly disgusted by the selfish, self absorbed nature of many from my generation and the generation before me.

    So instead of griping and moaning like Victor Meldrew, why not try accepting reality and sucking up the fact that boo hoo, you might have to work longer, otherwise the country will be bankrupt..

    Why, because you voted, not for what was right, but for who promised you the most, even though you knew that sooner or later someone would have to pay for your excesses.

  16. And in the meantime we have chemical weapons being used indiscriminantly in Salisbury and Syria while journalists are assassinated in Malta, Russia, Ukraine and Saudi Arabia (geographically Turkey, but in the Saudi Embassy).
    No wonder Paul prefers to stir in Finances/UK politics and not global politics, he can cope with a tongue lashing.

  17. The argument is the speed and lack of notice in which this matter has been dealt with. What should have happened is that both men and womens’ pensions should have met in the middle ie 62.5 years, adjusted over a much longer period of time. Of course, it could be said that the country could not afford to pay the extra pension, but if according to the Tony Lynes report, there WAS plenty of money in the pot, then maybe men should be protesting too!

  18. Savitry Cockeram 22nd October 2018 at 9:43 am

    I am one of those poor women . Bad health but not able to claim proper PIP as can walk more than 10 feet previously 50 feet so all around everything taken from me. Have a very small pension which I will get aged 60 next October but what will £500pm do. I had planned everything for aged 60, no one wants to employ me and I am a full time carer to my elderly mother( carers allowance ) carers allowance is less than job seekers allowance, how can that be when we do 35 hours plus per week?
    We need help as I and thousands of others are so badly affected .

  19. The fact is that the State Old Age Pension is a ‘state benefit’ and not a contributory scheme.
    This fundemental point is always overlooked by WASPI campaigners. As with any benefit, qualification is a matter for the government applying the legislation set out by Parliament.
    Long ago it was accknowledged that the link between the NI ‘fund’ and benefit providion was illusionary and that all benefits are paid out of general taxation.
    The WASPI womens claims of entitlement are false.
    The most effective thing they could do is campaingn against birth control or encourage immigration, becasue there needs to be more young people to pay for their retirement and ill health in future.

  20. Has any consideration been given to stopping Govt. DB Scheme pensions which old and young tax payers alike cannot afford?

    • No Ted, they have been recently (2015) “reformed”, so the NRA has increased and is now in line with SPA. However the acrual rates have now jumped to 1/54th and the schemes have changed from FS schemes, to CARE schemes.

      Whilst this does mean that those on very high earnings towards the end of their careers will get a bit less than they did previously, it also means that those whose career earnings are more level will actually get more.

  21. for all of the comment about this it does seem that had the N.I.Fund been left alone then all pensions were affordable at whatever year is picked remembering that the Fund is supposedly ring-fenced and should never have been plundered without repayment with interest ?

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