The true story of NI autocredits

In Waspiland, there's a claim doing the rounds that women have been unfairly treated regarding National Insurance (NI) contributions. Specifically, that men received NI credits enabling them to retire at 60, while women had to work till 66. As is so often the case with claims made by Waspi - or in this case, the hardcore Back to 60 group - the truth is rather different. Men did receive NI credits, yes, but there was no unfairness to women. Rather, the unfairness was to men. 

As always, the story starts with the unequal state pension ages of men and women. When the present state pension system was introduced in 1946, women's state pension age was set at 60, and men's was 65. To qualify for a full state pension, women had to make 39 years of NI contributions: because their state pension age was 5 years later, men had to make 44 years of contributions. 

During the inflationary 1970s, unemployment gradually rose to the highest levels since the Great Depression. Youth unemployment was particularly high, and for the first time, graduates were affected. Concerned by rising youth unemployment, in 1977 the Labour government introduced a job release scheme (JRS) for older employees, both men and women. Originally, it was limited to employees within one year of state pension age - ie 59 for women and 64 for men - and was conditional on the firm employing someone from the unemployment register to replace them. But by the mid-1980s it had been extended to all men over 60, and the conditionality had been lifted. 

The JRS paid a flat-rate allowance to people who took early retirement under the scheme. The allowance was significantly lower than the median income, but 70% higher than unemployment benefit and 40% higher than the basic state pension. It was attractive to those on low incomes, those who could supplement it with an occupational pension, and those who would otherwise lose their jobs. But there was one huge problem. It did not include NI credits. Unless they registered as unemployed, people who retired early could find themselves with a lower state pension when they reached state pension age. 

In March 1983, the Chancellor, Geoffrey Howe, announced that the JRS would be extended to men over 62 and women over 59 who wished to reduce their hours: 
I can now announce a new scheme for part-time job release. It will apply to the same categories of older people who are willing to give up at least half their standard working week, so that someone else who is without a job can be taken on for the remaining half. The allowances will be paid at half the full-time rate. The scheme will take effect from 1 October and should provide part-time job opportunities for up to 40,000 more people who are at present unemployed.
Simultaneously, Howe announced that men over 60 who were not working, including those who had taken early retirement under the JRS, would no longer have to register as unemployed in order to receive NI credits: 
Some 90,000 men between the ages of 60 and 65 now have to register at an unemployment benefit office if they wish to secure contribution credits to protect their pension rights when they reach 65. From April, they will no longer have to do this. Even if those concerned subsequently take up part-time or low-paid work on earnings which fall below the lower earnings limit for contributions, their pension entitlement will be fully safeguarded.
So the NI contributions of men aged over 60 would in effect be guaranteed by the state. 

Why did these "autocredits" only apply to men? Simple. Women could take their state pensions from 60, whereas men had to wait until 65. And men also needed 44 years of NI contributions to qualify for a full state pension, whereas women only needed 39. So only men were suffering from loss of pension rights due to retiring in their early 60s. 

It could be argued that women suffered a similar loss of state pension rights if they retired between 55 and 59. But the JRS scheme did not encourage them to do so. The autocredits were introduced because government policy at that time specifically encouraged men - but not women - to take early retirement some years before their state pension age. 
It could also be argued that it was harder for women to make enough NI contributions, because they tended to have long breaks from work, work part-time and be paid less than men. However, none of this was considered at the time. And as we shall see, it became irrelevant as far as women born in the 1950s are concerned. 

In 1995, legislation was passed to raise women's state pension age gradually to that of men, starting in 2010 and completing in 2020. As a consequence of this legislation, women would have to make the same NI contributions as men. Clearly, therefore, if men in their early 60s received automated NI credits, so too should women affected by the state pension age rises. In a letter sent to Myfanwy Opeldus in 2002, the DWP indicated an intention to extend autocredits to women: 
At the moment, we award National Insurance credits to men between the ages of 60 and 65 who don't work and don't pay National Insurance contributions. We do this to protect their basic State Pension entitlement. We will make similar arrangements for women from 2010, when their State Pension age begins to rise.
In 2007, the Labour Government cut the number of years of NI contributions required for a full state pension to 30 for both men and women. The change would take effect from 2010. As a result, it became much less likely that men retiring in their early 60s from 2010 onwards would not have a full NI contribution record. So, in 2009, the Labour government used a statutory instrument to phase out autocredits from 2010 onwards. 

An explanatory memorandum issued with the statutory instrument sets this decision in the context of the 1995 legislation equalising state pension ages. Autocredits had become a concession to men to soften the impact of continuing discrimination against them during the 25 years it would take to complete equalisation. They enabled men to stop work in their early 60s without suffering a state pension penalty:
7.33. Since 1983, National Insurance credits have been automatically available to men to make up any deficiencies in their record in the five tax years before the year in which they reach state pension age. “Autocredits” were introduced alongside changes that meant that men were no longer required to be available for work as a condition for receiving benefit once they reached age 60 (ie. the age at which women become eligible for the state pension). Autocredits protect a man’s basic state pension position during these five years if he is not working and paying National Insurance or entitled to credits for other reasons such as registered unemployed, sick, or a carer.
But autocredits did not give men an early state pension, as some have claimed. If men stopped work in their early 60s, they either had to live on their occupational pensions or, if they were poor, claim the means-tested Pension Credit. Women of the same age were, of course, receiving state pensions.

The memorandum goes on to acknowledge that the original intention had been to extend autocredits to women as their state pension age rose. It notes that under the original legislation, the number of years of NI contributions that women would have to make to qualify for a full state pension would have increased in line with their state pension age:
7.34. When the Government published its plans for state pension age equalisation in 1993, the intention then was that as women’s pension age increased gradually to 65, autocredits would become available to them on the same basis as for men. This was in part to compensate for the increase in the number of years women would otherwise have to pay National Insurance contributions for in order to qualify for a full basic pension. 
And it then explains the reasons for the decision to phase out autocredits: 
7.35. This approach has since been reviewed, for two reasons. Firstly, the qualifying age for Pension Credit (the income-related benefit currently payable to men and women at 60 without jobseeking conditions attached) is set to increase to 65 by 2020 in line with female state pension age. Men claiming Jobseeker’s Allowance or Employment and Support Allowance will no longer have the option of switching to Pension Credit in the run-up to state pension age and will continue to receive a credit through receipt of those benefits instead. Without the proposed change, autocredits would increasingly apply mainly to people who could afford not to work or claim benefit. Secondly, the reduction in the number of qualifying years needed for a full basic pension to 30 and the improvements in the crediting arrangements for carers under the measures introduced by the Pensions Act 2007 will mean that the need for autocredits to protect state pension entitlement will be significantly reduced. (Those who would have benefited from autocredits had they been available will still have the option of paying voluntary National Insurance contributions to make up “missing years”.) 
In short, as sex discrimination in state pension ages was progressively eliminated from 2010 onwards, the concessions made to men to soften the impact of that discrimination would be gradually withdrawn, rather than extended to women as well. Once state pension ages were equalised, both men and women aged 60-64 who were not working would have to rely on the working-age benefits system rather than any form of state pension provision. Those who qualified for working-age benefits would receive the NI credits associated with those benefits. 

Autocredits were to be phased out gradually between 2010 and 2020. As women's state pension age rose, the age at which men became eligible for autocredits would also rise, thus ensuring that men only received autocredits for the period during which women of their age were receiving state pensions but they were not:
7.36. This instrument amends the Credits Regulations to provide that autocredits will be available to men only for the tax years in which they have reached what would be pension age for a woman of the same age, up to and including the last tax year before the one in which they reach age 65. Men born on 6 October 1954 or later, who will reach both female pension age and their own state pension age in the same tax year, will not qualify for the credits. 
The timetable was accelerated in 2011 in line with the timetable for women's state pension age rises. Autocredits were eliminated completely in November 2018, when women's state pension age reached 65. 

However, the taper was considerably simpler than that for womens' state pension age rises:

(for comparison, you can find the timetable for women's state pension age rises under the 1995 Pensions Act here and the accelerated timetable under the 2011 Pensions Act here)

Because of this, some men will have received autocredits for short periods before women of their age reached state pension age. But we don't even know how many men received autocredits between 2010 and 2018, let alone how many of those received autocredits while women of their age were still working. All we have is a Freedom of Information response that tells us that between 1983 and 2018, as some 4.6m men may have qualified for autocredits. However, many of those men didn't need autocredits to qualify for a full state pension, either because they had already made enough NI contributions or because they were still working and paying NI. And some of the men died before reaching state pension age. So the truth is we have no idea how many men benefited from NI autocredits. It may not be very many. 

But of one thing we can be certain. Whether or not they benefited from NI autocredits, all of those 4.6m men were victims of statutory sex discrimination. They lived at a time when women of their age had earlier state pension ages than they did. Now, that discrimination has been eliminated, and with it the concessions such as autocredits that aimed to made it bearable. They are no longer needed by men, and they were never needed by women. What is needed now, as I have explained before, is reform of working-age benefits to make them less harsh and more suitable for both men and women as they approach retirement. 

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  1. Really interesing , thank you.

  2. Theresa Musgrove19 June 2020 at 11:12

    Your carefully constructed case falls apart on two grounds, both of which lie hidden in your own arguments: that is to say that government acted to 'soften the impact' of pension changes for men, but singularly failed to do so in the case of women. As women of the age affected by the pension years' loss have already been hugely impacted by discrimination in terms of equal pay, greater responsibility for child and family care, this blow was even greater - discrimination, in their case, was neither 'softened' by say, interim support, nor in any other way, which is why it has left so many women of this age struggling financially. The other point is, as you admit: "the truth is we have no idea how many men benefited from NI autocredits" - but we know that some certainly did.

    1. Theresa,

      I'm afraid you have completely misunderstood my post.

      The government did not act to soften the impact of pension changes for men. There were no state pension changes for them in the 1995 Act, only for women. What the government did was acknowledge that although it had decided to eliminate the long-standing sex discrimination against men with respect to state pension age, it would take a quarter of a century to do so. It therefore put in place some measures to soften the impact of the continuing discrimination against men during this time. One of those was access to means-tested Pension Credit from the age of 60, so that low-income men who did not have occupational pensions could retire at the same time as women of their age. Another was the continuation of autocredits, which enabled men to retire at the same time as a woman of their age without ending up with a reduced state pension because of an incomplete NI contribution record - I noted in the post that at the time, men had to contribute 5 years' more NI than women to qualify for a full state pension.

      The fact that some men benefited from NI credits has not disadvantaged women in any way. Women of the same age as those men were receiving full state pensions. while the men still had to wait. All the autocredits did was ensure that when men who retired in their early 60s eventually reached their state pension age, they did not end up with a lower basic state pension than a woman of their age.

      Access to Pension Credit and autocredits were both withdrawn for men in line with the raising of women's state pension age. So it is simply not true that men had protection from the effect of womens' state pension age rises while women did not.

      Whether the Government should have provided interim support to women whose state pension age was rising is an entirely different subject and beyond the scope of this post. I would simply observe that if it had offered interim support to those women, it would also have had to extend equivalent support to men of the same age, or risk legal action for sex discrimination.

    2. Theresa Musgrove20 June 2020 at 10:26

      With respect, again you are contradicting yourself, and also arguing from the point of a false premise - referring to 'the long-standing sex discrimination against men with respect to state pension age'. There was a 'difference', but it was not 'discriminatory' in regard to men, because it was recognised that there was already inequality for women in terms of their social roles, ability to earn and support themselves. Women did not have equality of access to education, jobs, or wages, and also had, and have, responsibilities for child care and care of older family members. That inequality, for that generation of women, continues - yet government has made no attempt to support them, 'to soften the impact', so as to survive the years without pension. There is also the question of the failure properly to inform women affected by the changes. Full consideration of the impact of the loss of those years should have been made, and interim support made available. The absence of both these measures has left a generation of women, in many cases, in extreme financial hardship in an outcome that is both unjust, and discriminatory.

    3. Theresa,

      The fact that the unequal state pension age constituted discrimination against men was accepted by the House of Commons as early as 1980. It was the primary driver of moves to equalise state pension ages. During the 1980s, both 60 and 63 were considered as potential equalised state pension ages, but the Major government of 1995 eventually went for 65.

      Ken Clarke's Budget statement of November 1993, in which he announced the equalisation of state pension ages, explicitly states that ending discrimination against men is the objective:

      "All developed countries are making similar changes for similar reasons. Women nowadays tend to spend more of their lives in paid employment. They also live longer than men. Pension schemes need to recognise this, and end the current discrimination between the sexes."

      You can find the whole speech here:

      So I'm afraid you are wrong. The higher state pension age of men was recognised as sex discrimination.

      Eliminating this discrimination could not be done quickly, so the government put in place measures to mitigate the continuing discrimination against men during the time it would take to equalise women's state pension age. Of course, if they had equalised at 60 these mitigating measures wouldn't have been necessary, but the 1995 government ruled that out on sustainability grounds.

      As I have previously pointed out, autocredits given to men to mitigate the impact of men's higher state pension age made absolutely no difference to the situation of women affected by state pension age rises. They have not disadvantaged women in any way.

      The second half of your comment is, I'm afraid, irrelevant. Whether the government should have taken steps to mitigate the impact on women of state pension age rises is a separate issue and beyond the scope of this post.

    4. Theresa Musgrove20 June 2020 at 13:42

      Ken Clarke's statement was an expression of opinion which was not true then, at that point, in regard to changing the qualification age, to a lower level of perhaps 63, and is certainly not true now, when no proper impact assessment has been made of the massive six year loss. "Tend to spend more time in paid employment'? His statement made no note of the continuing inequality of women in terms of lower pay, fewer opportunities, education, and more. The incremental extension to 66 and beyond was disproportionate, and not the original intention, and has created a profoundly serious problem which has not been addressed, and represents in itself an act of discrimination against an entire generation of older women. And the issue of failing properly to inform women is not a separate matter, as it was an important part of the arguments raised by the JR - at which I was present, incidentally. I understand the Appeal is being allowed on all grounds, therefore it is a valid consideration and central to the arguments put forward.

    5. Theresa, the Budget speech is a statement of Government policy, not an expression of the Chancellor's personal opinions. In November 1993, the Government announced that unequal pension ages were discriminatory, and laid out a plan to equalise them which would take a total of 25 years to complete. The legislation was passed in July 1995, and the Government subsequently put in place measures to mitigate the continuing discrimination against men during the ensuing quarter-century. You clearly think the decision, the plan and the mitigation measures were all mistaken, but your opinion is, I'm afraid, irrelevant. Facts are not a matter of opinion.

      Once again, the rest of your comment has nothing to do with the topic of this post. I will not publish any more comments from you that do not stick to the topic, as you are wasting my time and everyone else's.

    6. Theresa Musgrove20 June 2020 at 19:27

      Frances: yes, to be fair, I should have said that Clarke's remark about women was an opinion within the statement. Equally your remarks here are a subjective presentation of facts within a framing of your own opinion.

      It seems from your unnecessarily dismissive reference to 'wasting time' that you are not able to show respect for views that differ from your own.

      It is rather amusing that I am now blocked by both Backto60, and you, on Twitter: not for any reason in either case, other than an apparent fear of challenge, and perhaps transparency.

      Interesting too, that you are so quick to try to diminish the plight of women affected by pension loss: yet can suggest no form of resolution. Perhaps it is more important to you to win an argument than to consider whether that argument should be necessary in the first place?

    7. Theresa,

      Clarke's comment is a statement of policy, not opinion. And my analysis here is fact, not opinion. The only point in this post where I expressed an opinion was right at the end when I said that the focus should be on upgrading working-age benefits so they are less harsh and more suitable for older people. I would like to think that you would agree with me about this.

      I have allowed you to express your views repeatedly on this blogpost. If I did not "show respect" for views that differ from mine, I would not have published any of your comments. However, showing respect for someone's views does not have to mean agreeing with them.

      As far as Twitter is concerned, I operate a very simple rule, which I have publicly disclosed many times: I block people who are rude to me and mute people who are boring. If I have blocked you on Twitter, I'm afraid that is because of your own conduct.

      As I have repeatedly said, this post is not about the women affected by pension changes. It would have been inappropriate to discuss their "plight" or propose a "resolution" in this post, and I therefore resisted your attempts to turn the discussion to that in the comments. I have, however, written about this many times before, and you are welcome to read my previous posts. One of them is linked in the final paragraph of this post, and you will find others by searching for "pensions" or "WASPI" on this site.

      The comments policy of this blog is clearly stated on the "About this blog" page. It seems you have not read it, or you would know that I do not allow comments that are off topic - which is, of course, why "50s Lady" asked my permission to post something slightly off topic. Given this, I could simply have deleted both your previous comments, since they violated the comments policy. However, as you are new to this site, I chose to warn you instead.

      The comments policy also says that I will not publish comments that are rude to me or to any other poster here. You are sailing dangerously close to the wind on this too.

      I think I have given you quite enough rope. So here is my final warning to you. This is my site, and I set the rules. If you will not observe them, you can't comment here.

    8. Theresa Musgrove20 June 2020 at 23:12

      This comment has been removed by a blog administrator.

    9. Theresa, I have removed your comment as it violated this site's comments policy. If you wish to comment here, please be polite and refrain from personal attacks on me or anyone else.

    10. Theresa Musgrove21 June 2020 at 12:06

      This comment has been removed by a blog administrator.

    11. Theresa, I have again removed your comment because it violated my comments policy. I remind you that this is my site and I make the rules. Abide by the rules or don't comment here.

    12. Theresa Musgrove21 June 2020 at 18:08

      Abide by the rules? Lol: no, not really my style. I'll leave you in peace now, however, to argue with yourself.

      Have a good week.

  3. Well said Theresa. There was no equality in my lifetime. With caring responsibilities for children and parents whilst working full-time, and the lack of the same workplace opportunities and pension benefits/options when forced into part-time work. No wonder 50s women are suffering so much now. Heartbreaking!

    1. None of this has any bearing on the subject of this post.

  4. @Theresa Musgrove and @Unknown,

    I hope Frances Coppola will allow me to comment slightly off-topic, in response to your posts.

    As a woman born in the 1950s, I am simply staggered that anyone could seriously suggest that an earlier state pension age for women would make decades of discrimination in the working life acceptable. That's selling yourself a bit cheaply, isn't it? Besides, we have not actually suffered decades of discrimination at all. I am also disturbed that you appear to find it acceptable that a man your age should be discriminated against.

    Unequal pay has been illegal since the 1970s, i.e. the start of working life for most of us. I find it impossible to believe that anyone would have said "oh, alright then, I work for less than a man because I get a state pension at 60". I most certainly did not, I do not know any woman in real life who would have, and I simply don't believe anyone claiming on the Internet that they did. Nor do I know any man who would have even dared to suggest women should work for less because of the lower state pension age. But I accept that such men existed, and I hope they were all forcefully reminded of their legal duties.

    If any of us assumed greater responsibility for child and family care, that was a matter of personal choice, not imposed on us by anyone but ourselves. In terms of state pensions, we had nil disadvantage when taking time out of the working life to care for children or other relatives as we got full credits towards our state pension eligibility.

    If any of us accepted that state pension should be our only income in retirement whilst our husbands would have exclusive use of both, their state and works pensions, that is again a personal choice that nobody forced upon us. If you were/are in a relationship where you got/get financially abused, there has been help available throughout our adult life to get you out of it. So again, there is no justification for an earlier state pension, and an earlier state pension is quite obviously not an acceptable substitute for enduring any financial abuse from a partner. It is also a fact that hundreds of thousands of us do have works pensions in our own right, often in the form of index-linked final salary pensions.

    I am not saying that our lives were always milk and honey, far from it. Nor was it like that for men our age, or for anyone born after the 1950s. The idea that all women born in the 1950s are in any way special is quite simply ridiculous. There are, in actual fact, more men aged 60+ than women of the same age who are forced to live on working age benefits. Living on working age benefits is tough, for any gender and any age, and I am wholeheartedly in support of substantial improvements to the benefits system. It would, however, be absurd to pay all 1950s women extra money, even if they live in millionaire households, which many of us do (I am not one of them, I hasten to add).

    The average man also dies at a younger age than the average woman, so even after the state pension age equalisation, over their lifetime, men still stand to get less state pension than women. This despite having contributed more to the benefits system - as by your own argument, women earn less over a lifetime than men, and therefore pay less tax and NI in a lifetime.

    If you, like me, are serious about gender equality, you need to admit that the state pension legislation discriminated against men for decades, and that it was high time that the state pension age was equalised. Whilst we were the first who experienced an increase in our state pension age, almost all of us 1950s women still get our state pension at a younger age than those who will be paying it.

    Regarding the above article by Frances: I am 100% supportive of her argument as it is completely logical, unemotional, and well researched.

    1. Theresa Musgrove20 June 2020 at 19:36

      '50s Lady' - yes, I am sure Frances will allow your comment, even though it is off topic, as it agrees with her opinion.

      I'm sorry, but I don't agree with your view of the absence of inequality for women of this generation, for the reasons I have already given. I'm not sure what you mean in referring to gender equality. There cannot be equality applied retrospectively, and it is because of historic inequality that this case was brought.

    2. Thank you, 50s Lady, for politely asking permission to post slightly off-topic. I found your comment interesting and informative, and am more than happy to publish it.

  5. This comment has been removed by a blog administrator.

  6. Very interesting, thanks for this post. Previously, I didn't think there was any kind of discrimination.

  7. Francis do you think it was ok to double dip women born in 1954 like me. I had 18 months added on to 4 years and 5 months I was born in August 1954 if I had been born exactly 1 year earlier I would have got my pension 3 years and 4 months earlier. It's TRUE that many not all countries have equalised pension age. Not one other country has double dipped their women meaning that the women affected had to rearrange their finances TWICE.

    1. No, I don't think it was ok. I have always thought the 2011 Act was harsh and unfair to women like you.

  8. Francis do you think it was ok to double dip women born in 1954 like me. I had 18 months added on to 4 years and 5 months I was born in August 1954 if I had been born exactly 1 year earlier I would have got my pension 3 years and 4 months earlier. It's TRUE that many not all countries have equalised pension age. Not one other country has double dipped their women meaning that the women affected had to rearrange their finances TWICE.

  9. So stop defending the indefensible! I chose to care for children, grandchildren and elderly relatives. Pension people have advised I can't claim any Nat Ins credits for the years I looked after my mother. Apparently I left it too late to claim! How was I to know this? At the time I had no time to even consider my state pension!


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