PENSION PAIN
Major update for 300,000 people hit by huge state pension error – are you owed £1,000s in compensation?
Read on to find out how the situation began and what is being done to fix it
HMRC has issued a huge update for hundreds of thousands of people affected by a state pension error.
The Department for Work and Pensions recently said it has "basically finished" a correction exercise to compensate thousands who have been underpaid the benefit.
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The error, which was first revealed in 2022, has seen hundreds of thousands of retirees missing out on money they are entitled to.
Permanent Secretary Peter Schofield was asked for an update on the DWPs work to fix the underpayments in the latest Work and Pensions Committee hearing.
In his response he confirmed the DWP has been through more than 800,000 records.
He added that it has paid over £736million to the affected individuals over a three year period.
Read more on the state pension
But now the Government has started another investigation into a large error going back decades.
Mr Schofield said: "We have got through around 11,000 of those that have come through.
"Around 19,000 have been handed over to DWP, and we have got through around 11,000 of those, so we are making good progress on that."
According to data from the Department for Work and Pensions (DWP) these pensioners could get back payments worth an average of £7,859.
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HRP was a scheme to protect parents who were not able to earn and pay National Insurance because they were at home raising children.
A year at home with a child for whom you were getting child benefit counted as a ‘credit’ on your National Insurance record.
What are the different types of pensions?
But before 2000 it was not obligatory to include a National Insurance number on your child benefit claim.
If there was no National Insurance number on the claim then it could not be ‘mapped’ onto a separate record that stored the National Insurance records.
This means lots of people missed out on the credits.
The DWP estimates that between £300 million and £1.5billion in State Pension payments were underpaid due to the mistake.
Former pensions minister explains what you should do
STEVE Webb is a former pensions minister and partner at pension consultants Lane Clarke & Peacock.
He explains what families who receive these letters should do.
Whilst it is good that HMRC are writing to mothers who may have missed out, I am concerned that many people who are entitled may still be missed.
If you are an elderly pensioner and receive a letter out of the blue asking you to go on a website and fill in a form regarding children from decades ago, you might well think it a scam or ignore it.
And where the mothers who missed out are sadly no longer with us, it is going to be incredibly hard for families to work out if their late mother would have been entitled and to put in a claim.
It is vitally important for anyone who thinks they or their mother might have been entitled to make a claim for HRP and see what happens.
More than 493,813 people have already used a GOV.UK online tool to check if they are missing HRP.
Anyone who is affected by the error should receive a back payment by the end of the year.
In 2022 the DWP became aware of the issue and began to correct it.
It invited people who were potentially affected to apply for the correction exercise and fix their records.
Some people have received back payments from the DWP while others have received corrected State Pension payments.
A barrier to resolve this issue is that all the child benefit records have been deleted, so it is unclear who has missed out and who has not.
HMRC has written to around 370,000 people over the State Pension age who do not have HRP on their record but may be entitled and have encouraged them to put in a claim.
If HRP is awarded then it will improve their National Insurance record and they will get bigger State Pension payments.
They may also get arrears back to when they reached the State Pension age.
In some cases this could see them given payments of tens of thousands of pounds.
HMRC is now writing to people who are below the State Pension age and may have also missed out.
HMRC processed 37,289 applications from people above the State Pension age by the end of last September.
It processed 5,428 from those aged under 66 and has paid out more than £42 million in back payments.
But tens of thousands of people who lost out have sadly passed away.
These families could still claim the money if they put in an application for HRP in the name of the deceased person.
If it was awarded the DWP would then work out the pension arrears.
What is Home Responsibilities Protection?
Home Responsibilities Protection (HRP) was a scheme to help protect parents' and carers' State Pension.
It was replaced with National Insurance credits in 2010.
You would have received HRP automatically if between April 6, 1978 and April 5, 2010 you claimed:
- Child benefit for a child under 16
- Income support because you were looking after a sick or disabled person and were not available for work
If you reached the State Pension age before April 6, 2010, then HRP reduced the number of qualifying years you needed to get the full basic State Pension by up to 22 years.
Victim received £17,000 after Government error
HUNDREDS of thousands of women are owed money after being caught in the state pension error.
Mrs Atkinson, 75, received £17,000 after falling victim.
Mrs Atkinson, who lives in Cornwall with her husband, was getting a state pension of £134 per week based on 29 years of National Insurance contributions.
But when she heard about Home Responsibilities Protection, she decided to apply.
Mrs Atkinson submitted her application in March 2023.
She received a letter back from HMRC in June to say she had been awarded HRP from 1978/79 to 1988/89.
Although she worked for some of these years, most of them showed as blank on her National Insurance record.
Receiving HRP for those years would improve her pension.
She contacted former pensions minister Steve Webb to ask for help and he took up her case.
As a result, her state pension increased by £29.68.
She has also received a lump sum of £16,966 for all the underpayments since she retired in 2009.
To get a full basic State Pension a woman needed 39 qualifying years and a man 44 qualifying years.
Meanwhile, if you reached State Pension age between April 6, 2010 and April 5, 2016 then you needed 30 qualifying years on your National Insurance record to get the full basic state pension.
If you reached the State Pension age on or after April 6, 2010, then any HRP you had for full tax years this date was automatically converted into National Insurance credits if you needed them.
You could only convert up to a maximum of 22 qualifying years.
How can I still apply for it?
You have to apply for HRP if you think it is missing from your National Insurance record.
You may be able to apply for HRP if for a full tax year between 1978 and 2010 if any of the following were true:
- You were claiming Child Benefit for a child under 16
- You were caring for a child with your partner who claimed Child Benefit instead of you
- You were getting Income Support because you were caring for someone who was sick or disabled
- You were caring for a sick or disabled person who was claiming certain benefits
You can also apply if for a full tax year between 2003 and 2010 you were a foster carer or cared for a friend or family member’s child.
You can check if you are eligible for HRP on the GOV.UK website.
HMRC aims to process an application within 15 days and once it has been processed, the DWP aims to notify the customer of any changes to their pension within 8 weeks.
An HMRC spokesperson said: “We encourage everyone who thinks they are missing out to check their eligibility for Home Responsibilities Protection on GOV.UK.
"Taking just a few minutes out of your day now could mean a boost to your retirement.”
You can apply for HRP online or by post.
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Or call the HMRC National Insurance helpline on 0300 200 3300 for an application form.
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