Thousands of mothers who are missing out on their full State Pension entitlement after mistakes were made calculating their entitlement have started to receive letters from HMRC to redress the error.
The letters are being sent to women who have taken time off work to raise children since 1978, after the underpayments were highlighted in the Department for Work and Pensions (DWP) July 2022 annual report. Women may have been underpaid by tens of thousands of pounds each over the course of their retirement as they didn’t receive National Insurance credits towards their State Pension entitlement.
If you receive a letter from HMRC that suggests you could be one of those affected, it’s important to check if you’re owed a State pension back payment. HMRC is expected to owe affected women an average of £5,000 each, and letters are being sent out over the next 18 months, with those over State Pension age the first to receive them.
According to MoneySavingExpert, the letter will be titled “You may be eligible for Home Responsibilities Protection” and will urge you to visit the Gov.uk HRP page. If you’re worried about scammers using this issue to approach you, you can call HMRC on 0300 200 3500 to check that the letter is genuine.
The issue was originally flagged by Sir Steve Webb, former Pensions Minister and consultant at Lane, Clark & Peacock (LCP), and corrections made to women’s records in 2011 saw 36,000 receive a share of £83m. However, the DWP report reveals there could be thousands more women still missing out on their rightful State Pension entitlement.
It is not the first time that women’s pensions have been underpaid. This latest issue follows the scandal surrounding underpayment of the State Pension to married women and widows who claimed their State Pension before April 2016. They were entitled to higher rates based on their husbands’ records, with the amount underpaid estimated to be around £1.5 billion. Many pensioners are continuing to be underpaid as a result of the mistakes, and tens of thousands have passed away without receiving a penny of the money they were owed.
The DWP has promised to track down and pay the amount owed to those who have been affected by the end of 2024. Read more in our article Is my State Pension being underpaid? and Underpaid State Pension scandal shows system not fit for purpose.
If you’re considering getting professional financial advice, Unbiased is offering Rest Less members a free pension review. It’s a chance to have a qualified independent financial advisor (IFA) take a look at your pension arrangements and give an unbiased assessment of your retirement savings.
The review is free and without obligation, but if the IFA feels you’d benefit from paid financial advice, they’ll go over how that works and the charges involved.
Are you affected?
Since 1978, parents who took time out of work to care for their children should have been given credits for those years to complete any gaps in their NI record.
Known originally as ‘Home Responsibilities Protection’, the system was designed to protect parents’ State Pension entitlement while they were out of work and bringing up children. The National Insurance credit system replaced HRP in 2010 for carers taking time off work to look after others.
HRP was given to those claiming child benefit, or in receipt of income support if they were caring for a person with a serious illness or disability. HRP and now NI credits are important as they ensure you aren’t left with gaps in your NI record, and count towards the ‘qualifying years’ you need to be entitled to the State Pension. You may also be able to claim NI credits if you’re a grandparent caring for grandchildren. Find out more in our article Caring for grandchildren: how it can help boost your State Pension.
The current full New State pension is £203.85 a week in the 2023/24 tax year. However, you’ll only be eligible for the maximum new State Pension if you’ve made 35 ‘qualifying years’ of NICs, and you must have at least 10 years’ worth to receive any State pension at all. You usually get qualifying years for every year you’re in work, and earning above a minimum amount (£242 a week in the 2023/24 tax year) or if you’re paying voluntary contributions. However, you can also get National Insurance credits if you’ve taken time out of the workplace to bring up children, or look after someone who’s ill or disabled. Read more in our article How the State Pension works.
However, the system has failed to apply its own rules, and the Department for Work and Pensions has admitted that this error is the second-largest reason for mistakes in State Pension payments.
Webb said he has been contacted by dozens of women who were told they weren’t entitled to a penny in State Pension, when this wasn’t correct and some were owed thousands of pounds. He has highlighted the case of a woman who has successfully claimed for 12 years of HRP, receiving more than £4,000 as a result, and increasing her State Pension entitlement from nothing to £79 a week.
He has launched a campaign called ‘Mothers Missing Millions’ to help those affected correct the errors.
He said: “The DWP has admitted that even more people are being underpaid the State Pension than previously thought, with a whole new category of errors coming to light.
“Yet again, this error overwhelmingly affects women, and undoubtedly means that many thousands have been underpaid for years.”
A spokesman for the DWP said: “This year we will spend over £110 billion on the State Pension and support over 12.5 million pensioners.
“We are investigating an issue with the historical recording of Home Responsibilities Protection, with work underway to identify those affected.”
What can you do to correct errors?
If you don’t receive a letter from HMRC and believe you are affected by this latest underpayment issue, you can take steps to check if you’re owed a State Pension back payment.
LCP has launched a campaign called Mothers Missing Millions to help those affected correct the errors. It’s launched a tool to enable people to check they aren’t missing out on State Pension payments.
Webb said: “Rather than wait for the government to fix the problem, I would encourage anyone who has received child benefit since 1978/79 to check that the relevant credits are on their NI record. If not, this can be fixed by filling in a form, and the result could well be a higher pension and a worthwhile lump sum.”
You can check your NI record to see if you’re receiving the correct HRP or NI credits, which shows any incomplete years in your record since 2006. If you have gaps, consider what you were doing during those years and whether there might be a mistake.
If you find there are incorrect gaps in your record up until March 2010, you need to complete form CF411 on the government’s website to ensure the correct information is added to your account. To claim any missing NI credits since April 2010, you need to fill in CF411a. HMRC should then update your NI record and you should receive the correct amount of State Pension payments, and any amount you’re owed.
You can also contact the HMRC National Insurance helpline to request an application form. Once you’ve completed it, your State Pension entitlement should automatically be recalculated and the money you are owed paid. You’re still able to apply for HRP if between 1978 and 2010 you were sharing the care of a child under 16 with a partner you lived with, and they claimed child benefit instead of you, or if you were caring for a sick or disabled person.
Get advice on your State Pension and other retirement savings
If you’ve got any queries about your State Pension, you can contact the Pensions Service by telephone on 0800 731 0469 or find out other ways to get in touch with them here.
If you need help with working out what to do with any defined contribution pensions you might have, and you’re aged at least 50, you can arrange a phone appointment via the government’s free service called Pension Wise.
You can find a local financial advisor on VouchedFor or Unbiased, or for more information, check out our guide on How to find the right financial advisor for you.
If you’re considering getting professional financial advice, Unbiased is offering Rest Less members a free pension review. It’s a chance to have a qualified independent financial advisor (IFA) take a look at your pension arrangements and give an unbiased assessment of your retirement savings.
The review is free and without obligation, but if the IFA feels you’d benefit from paid financial advice, they’ll go over how that works and the charges involved.
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