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State pension for overseas spouses to be axed

Married person’s allowance to be abolished in 2016

The government’s Pensions Bill has been unveiled in the Queen’s Speech, and has confirmed that entitlement to the state pension will depend on an individual’s own contributions, rather than those of their spouses.

The current rules allow people who haven’t made National Insurance contributions to claim a weekly state pension of £66 based on their spouses contributions. 

However, it was announced today that this will be axed in order to save hundreds of millions of pounds in payouts to spouses who live abroad. 

You can read more about how the state pension works in our State pension explained guide.

Reforms aimed at overseas spouses

According to government figures, 200,000 overseas residents claim married person’s allowance at a cost of £410m a year – and more than half of these claimants have never been to the UK, which the government believes is unfair.

The reform will also affect spouses in the UK. This comes despite the fact that the number of women in the UK claiming state pension based on their husband’s National Insurance record is falling. Our guide to National insurance has more details on how this works.

Pensions minister Steve Webb said that fewer UK-based pensioners would be affected because people who live and work in the UK build up state pension entitlement themselves. However, 1.7 million pensioners claimed married couple’s allowance in 2012, and they will all be affected.

Part of wider state pension reform

This news comes as part of wider state pension reforms announced in the Pensions Bill, which was introduced in the Queen’s Speech today.

Also included in the Pensions Bill are the government’s plans to introduce a flat-rate state pension of £144 a week (in today’s money), the abolition of the additional state pension and the increase of National Insurance qualifying years from 30 to 35. These reforms will come into force in 2016.

However, pension experts say that axing the married person’s allowance will have a limited impact because of these broader state pension reforms. The fact that existing claimants can continue to draw this allowance also means that it will affect fewer people.

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