Major update on state pension underpayments – are YOU one of thousands owed cash?
A MAJOR update has been issued on state pension underpayments made due to a Government error.
The error affects some parents who claimed child benefit before 2000 and have gaps in their National Insurance records.
Specifically, it relates to those who should have received Home Responsibilities Protection (HRP) to ensure they got the correct amount of state pension later in life.
In a recent update, the Government confirmed all cases relating to the issue will be resolved by March 2027.
DWP permanent secretary Peter Schofield wrote to the Work and Pensions Committee (WPC) saying: “Customers have up to two years to provide any additional information, so we can expect to clear the small number of remaining cases during 2025-26, and some missed conversions through to the end of 2026-27.
“We are dealing with these cases on receipt and anticipate all cases to be resolved by the end of March 2027.”
So far, the DWP and HMRC have identified around 119,000 cases of, largely women, who were underpaid due to the HRP error. They have received £735million between them.
But there are still thousands of eligible people who are yet to have responded to letters sent by the Government telling them they could be owed money.
It is understood this is due to the Government requiring further documentation from them.
Steve Webb, partner at pension consultants LCP, said the majority of the outstanding HRP cases relate to widows where the average repayment is worth around £11,900.
He added: “It has already taken more than four years to fix all of these errors, so it is vital that matters are wrapped up as soon as possible.
“Anyone who has had a letter about errors should make sure they return it with all the relevant information so that any underpayment can finally be put right.”
The HRP error was first discovered in September 2022 and published in the DWP’s annual report.
The Government department said the error was the “second largest” it had found relating to state pensions.
Steve Webb, from LCP, launched a campaign called Mothers Missing Millions to help the parent’s missing out on cash due to the error.
Who is impacted and what can I do?
Those who claimed child benefit, largely women, prior to May 2000 could have gaps in their National Insurance (NI) record and be owed money.
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.
This is because the amount of state pension you get is based on your NI contributions and number of qualifying years you have.
From 1978 to 2010, protection was provided for parents to avoid these gaps through HRP.
This system was then replaced in 2010 by the NI credits, which is still in operation now.
However, if someone claimed child benefit before May 2000 and didn’t put their NI number on the form, their credits may not have been transferred to their NI account from the child benefit computer.
The reason only those claiming child benefit before May 2000 may be due extra state pension cash is because parents had to include their NI number on their child benefit claim after this point.
What was HRP?
Home Responsibilities Protection (HRP) was a scheme to help protect parents’ and carers’ state pension.
It was designed to help these people by reducing the number of National Insurance years they needed to qualify for a full state pension.
National Insurance credits replaced HRP in 2010.
You’ll have received HRP automatically if between April 6, 1978, and April 5, 2010, you were claiming:
- 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 get in touch with HMRC and are found to have been underpaid, your NI records will be corrected and the Government will then recalculate state pensions and pay arrears.
This could result in increased pension payments as well as a lump sum payment.
People can check their eligibility for backdated HRP and make a claim via https://www.gov.uk/guidance/apply-for-home-responsibilities-protection, with HMRC saying the process takes around 15 minutes.
You can also claim by post by filling in a CF411 form which can be downloaded off the link above or call the HMRC helpline on 0300 200 3500/
If the Government thinks you were affected by the HRP error you should have also received a letter.
What are 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
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