HM Revenue & Customs (HMRC) will write to people, many of them older women, to find out if they have information missing from their national insurance (NI) records which could affect their state pension.
Some people may have home responsibilities protection (HRP) missing from their NI records.
HRP was a scheme to help protect parents’ and carers’ entitlement to the state pension and NI credits replaced HRP from April 6 2010.
HMRC will start contacting those affected from autumn 2023 in phases, in order of how close they are to state pension age. Those over state pension age will be contacted first.
The scale of these errors is huge. It is shocking that so many women have been underpaid so much money. This makes it essential that things are put right as a matter of urgency— Sir Steve Webb, LCP
Some people affected may have died and their families will be entitled to check their eligibility and make a claim for any arrears.
The Department for Work and Pensions (DWP) and HMRC are working together to find people affected and correct their records so they receive the right amount of state pension.
The National Audit Office (NAO), which scrutinises public spending for Parliament, said it is estimated that 210,000 people have been underpaid £1.3 billion of state pension due to historical issues relating to HRP.
But it said the estimate from the DWP is “very uncertain” and could range from £310 million to £1.5 billion.
If someone claimed child benefit before May 2000 and did not provide their NI number on the claim, their NI record may not show the correct number of qualifying years of HRP, which could affect their state pension entitlement.
Women aged in their 60s and 70s are most likely to be affected, the Government said.
HMRC is using NI records to identify as many people as possible who might have been entitled to HRP between 1978 and 2010 and have no HRP on their NI record.
The most important thing now is that those who have been underpaid are identified as quickly as possible and put back in the position they should have been— Tom Selby, AJ Bell
It will write to people who meet these criteria, to find out if they are eligible to claim. If they are eligible, they can claim online.
DWP will recalculate the state pension entitlement and let people know whether they are due any arrears.
Sir Steve Webb, a former pensions minister who is now a partner at LCP (Lane Clark & Peacock) said: “Missing out on protection for time at home with children could make a huge difference to a mother’s pension entitlement, and lump sum payments of arrears could run into many thousands of pounds for those who are affected.
“I hope that this correction process will be completed as quickly as possible.”
Sir Steve added: “The scale of these errors is huge. It is shocking that so many women have been underpaid so much money. This makes it essential that things are put right as a matter of urgency.”
LCP has previously campaigned to raise awareness of the issue and launched a “mothers missing millions” campaign and website – lcp.uk.com/mothersmissingmillions – to help people work out if they might be affected.
Tom Selby, head of retirement policy at AJ Bell, said: “The most important thing now is that those who have been underpaid are identified as quickly as possible and put back in the position they should have been.
“Tragically, it is inevitable some will have died before they can receive the compensation they are owed.”
A Government spokesperson said: “We have identified and are correcting an issue related to the historical recording of home responsibilities protection on the national insurance records for people who first claimed child benefit before May 2000.
“Most people’s records will be unaffected, and we will shortly be launching a new online tool to help people check whether they need to claim. HMRC will also begin writing to those likely to be affected from the autumn.
“Our priority is ensuring everyone receives the financial support to which they are entitled, and state pension underpayment rates due to official error remain low at 0.5% of expenditure. Where errors do occur, we are committed to fixing them as quickly as possible.”
