State pension error update after 370,000 sent letters – are you owed £7,859?
HMRC has issued a major update concerning hundreds of thousands of women impacted by a huge pension error.
Fresh figures reveal that 370,000 women have been contacted regarding potential underpayments on their state pension, stemming from Home Responsibilities Protection (HRP) errors.
Between January 8 and September 30, 2024, HMRC identified 5,344 cases of underpayment among those who responded to the letters, totalling approximately £42 million in arrears.
These cases were then referred to the Department for Work and Pensions (DWP), which has since issued an average of £7,859 in back payments to the affected individuals.
However, hundreds of thousands more who may be entitled to similar back payments will not receive them unless they take action.
This issue affected individuals who took time off work to care for children or someone with a disability between 1978 and 2010.
The problem arose because child benefit claim forms submitted before 2000 often didn’t include a National Insurance (NI) number, meaning the relevant HRP information wasn’t transferred from the child benefit system to the NI system.
HRP would have added credits that counted towards their state pension, much like NI credits work today.
As a result, thousands missed out on state pension benefits worth an average of over £5,000.
It’s understood that 43,000 of those affected by the historic error are now deceased.
In an effort to locate those who are still alive, HMRC has issued more than a quarter of a million letters to people over pension age with no HRP on their record, encouraging them to submit a claim.
They may then be issued backdated payments, as well as a new monthly income if they’re found to have been affected.
Individuals who receive a letter indicating they may be affected can verify their status by visiting tax.service.gov.uk/guidance/Check-if-you-are-eligible-to-apply-for-Home-Responsibilities-Protection.
You can then apply for any missing HRP credits by visiting gov.uk/guidance/apply-for-home-responsibilities-protection.
An expert recently revealed that more pensioners could be owed cash but have been unable to claim because their letters only explain that they can apply online.
However, if you can’t do that, you can still complete a CF411 form and return it to HMRC by post to add the credits to your record.
You might also be eligible for missing HRP credits if any of the following situations apply to you:
- You were caring for a child while your partner claimed child benefit instead of you.
- You were receiving 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.
If your partner claimed child benefit, you might be able to transfer the HRP credits, but they will need to agree.
For example, if you were a stay-at-home parent and your working partner claimed the child benefit, they can transfer the credits to you.
Your payments will be recalculated if you have missing HRP credits and have already reached state pension age.
Emma Reynolds, minister for Pensions, said: “The government’s priority is to ensure pensioners have security and dignity in retirement.
“I strongly encourage anyone who thinks they are missing out to check their eligibility and apply for Home Responsibilities Protection – taking just a few minutes out of your day now could mean a boost to your retirement.”
This isn’t the only type of state pension underpayment blunder affecting retirees.
STATE PENSION ERRORS
STEVE Webb, partner at LCP and former Pensions Minister, explains what state pension errors are and how they can occur...
The way state pensions are worked out is so complicated that many thousands of people have been paid the wrong amount for years without even realising it.
The amount of retirement pension you get usually depends on your National Insurance (NI) record.
One big source of errors has been cases where NI records have been incorrect, particularly for years spent at home with children.
This is a system known as ‘Home Responsibilities Protection’.
Alternatively, particularly for older pensioners, the amount you get can depend on the NI contributions made by your spouse.
Errors have arisen where the Government has failed to adjust the pensions of married women when their husbands retired or failed to increase pensions when someone was bereaved and lost a husband or wife.
Although the Government has spent years trying to fix these problems, there are still many thousands of people – many of them older women – on the wrong pension.
If you have always thought that your pension seems low, then it is worth contacting the Pensions Service to ask them to check, especially if you spent time at home raising children or if you were widowed and your pension didn’t change when your spouse died.
UPDATE ON OTHER ERRORS
Additional figures show that almost 120,000 women have been short-changed on their state pensions and are owed up to £11,905 each.
This blunder affected married women whose husbands reached pension age before 2008, as well as widows and women over 80.
They were entitled to an ‘enhanced pension‘, which could have boosted their payments by up to 60%, but they didn’t receive it at the time.
Your husband must have turned 65 before March 17, 2008 to qualify.
The DWP has now completed payouts to married women and those over 80.
They’ve paid £250.6million to 45,907 married women, with an average payout of £5,591.
Women over 80 have received £68.2million across 33,437 cases, with an average of £2,202 each.
As of November 2024, the DWP is still issuing payments to widows affected by the issue.
So far, £417.2million has been paid to 39,706 widows, with an average of £11,905 each.
It means that in total, 119,050 women are owed up to £11,905 each from the DWP.
The DWP added that it expects to issue payments owed to all remaining widows by the end of 2024.
How does the state pension work?
AT the moment the current state pension is paid to both men and women from age 66 - but it's due to rise to 67 by 2028 and 68 by 2046.
The state pension is a recurring payment from the government most Brits start getting when they reach State Pension age.
But not everyone gets the same amount, and you are awarded depending on your National Insurance record.
For most pensioners, it forms only part of their retirement income, as they could have other pots from a workplace pension, earning and savings.
The new state pension is based on people’s National Insurance records.
Workers must have 35 qualifying years of National Insurance to get the maximum amount of the new state pension.
You earn National Insurance qualifying years through work, or by getting credits, for instance when you are looking after children and claiming child benefit.
If you have gaps, you can top up your record by paying in voluntary National Insurance contributions.
To get the old, full basic state pension, you will need 30 years of contributions or credits.
You will need at least 10 years on your NI record to get any state pension.
TRACK DOWN ERRORS
LCP has developed an online tool to help people understand what state pension they are entitled to inherit on top of their own state pension at go.lcp.com/inheritingstatepension.
A tool previously launched by the company to help married women check for underpayments had over one million visits.
The DWP also has a tool to help those receiving the new state pension assess their eligibility for inherited state pension amounts at gov.uk/state-pension-through-partner.
There is also a guide on inheriting or increasing a state pension at gov.uk/new-state-pension/inheriting-or-increasing-state-pension-from-a-spouse-or-civil-partner.