Last week, HM Revenue and Customs (HMRC) announced that it will start writing to thousands of older people this autumn who may have been underpaid their State Pension due to missing information on their National Insurance (NI) record. The issue affects mostly women in their 60s and 70s who may have Home Responsibilities Protection (HRP) missing from their NI record.
HRP was a scheme designed to help protect parents’ and carers’ entitlement to the State Pension and was replaced by NI credits from April 6, 2010. 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.
After May 2000 it became mandatory to include a NI number on claims so people claiming after this point will not have been affected. It is estimated that 187,000 people are due an average of £5,000 in back payments.
However, NI records are not available for all those affected as Child Benefit records are deleted five years after the claim ends.
HMRC will start contacting those affected from this autumn in phases, in order of how close they are to State pension age. Those over State Pension age will be contacted first.
Some people affected may have died and their families will be entitled to check their eligibility and make a claim for any arrears.
The 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 £1.3billion 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 £310million to £1.5billion.
HMRC will write to people who meet the criteria, to find out if they are eligible to claim - if they are, they can claim online. DWP will recalculate the State Pension entitlement and let people know whether they are due any arrears.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, warns that it’s going to be a ‘long process’ and ‘many people face significant waits before receiving what they are due’.
Ms Morrissey said: “The scale of the State Pension underpayments is staggering and has caused many thousands of people unnecessary financial distress. People have an expectation that they will receive the correct amount of State Pension at the right time and for so many people this has not been the case.
“The identification of Home Responsibilities Protection claimants as another group affected is disappointing.”
She continued: “HMRC is to start contacting those potentially affected in the autumn but given the experience of other groups affected by underpayments we know it’s going to be a long process and many people face significant waits before receiving what they are due.
“In the case of those affected by Home Responsibilities Protection many records do not even exist anymore and so HMRC faces a laborious process of going through National Insurance records to try and identify people.”
Ms Morrissey warned: “There’s every chance many of those affected could continue to be overlooked and not receive what they are entitled to.”
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 here, to help people work out if they might be affected.
A UK 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.”
Guidance published on GOV.UK also states that “people do not need to call DWP or HMRC”.
To keep up to date with developments in this DWP corrections exercise, join our Money Saving Scotland Facebook page here, follow us on Twitter @Record_Money, or subscribe to our newsletter which goes out Monday to Friday - sign up here.
READ NEXT
New calls for State Pension Triple Lock review to make sure it remains 'fit for purpose'
New calls to keep State Pension age at 66 due to life expectancy in Scotland
New State Pension payments may be less than older people retiring this year expect
DWP urged to create ‘bold’ new Pension Credit uptake strategy
Mobility element could be included in new Attendance Allowance-style benefit
