by The Department for Work and Pensions has confirmed that it has started issuing refunds to 187,000 people for underpayment of the State Pension. The refunds average around £5,000 and apply to people with incorrect National Insurance records.
Thousands of people have been given less State Pension than they were entitled to, due to Home Responsibility Protection (HRP) or Universal Credit National Insurance issues. HRP was a scheme to help protect the entitlement of parents and carers to a State Pension and was replaced by National Insurance credits from 6 April 2010.
If someone claimed Child Benefit before May 2000 and did not provide their National Insurance number on the claim, their records may not show the correct number of HRP qualifying years, which could affect their entitlement for the State Pension. Women in their 60s and 70s are most likely to be affected, the Government said.
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The Department for Work and Pensions (DWP) and HMRC are working together to find affected people and amend their records so that they receive the correct amount of State Pension. The National Audit Office (NAO), which scrutinizes public spending for Parliament, said 210,000 people were estimated to have been underpaid £1.3 billion in State Pension due to historical HRP issues. But he said the estimate could be between £310 million and £1.5 billion.
Dame Angela Eagle, Labor MP for Wallasey, asked the DWP for the latest update on how many people have been underpaid the State Pension due to incorrectly updated National Insurance records and how much these people are owed, reported the Daily Record.
Pensions Minister Paul Maynard, Conservative MP for Blackpool North and Cleveleys, confirmed in written replies that the DWP started sending out refunds earlier this year. He said: “The exercise to correct National Insurance records for those individuals who have been affected by errors in their HRP record is ongoing. The HRP correction exercise started with HMRC sending letters in late 2023. processing of cases subsequently notified by HMRC in the DWP in early 2024. .
“In the Department’s Annual Report and Accounts 2022-2023, the core estimate was around 187,000 cases of potential State Pension underpayment which we expect to correct, with a total estimated underpayment of £1,043 million.”
He explained: “This answer covers both Home Responsibility Protection (HRP) and UC National Insurance questions.” Mr Maynard said the average payment owed to those pensioners who are still alive is £5,000, and £3,000 to those who have since died.
Mr Maynard added: “We plan to publish an update on the exercise in this year’s Annual Report and Accounts. The DWP has corrected the UC data issue for the affected cases for the tax years up to tax year 2022/2023 including that year shared with HMRC.
“As NI records are updated by HMRC, these updates are sent to the DWP. Any State Pension entitlement will be reassessed, and any underpayment will be addressed accordingly.”
HMRC are using National Insurance records to identify as many people as possible who may have been entitled to HRP between 1978 and 2010 and who have no HRP listed on their records. He is sending out letters to people who may have been affected, in order of how close they are to State Pension age. Those over pension age will be contacted first. In January, the DWP said the first batch of letters had gone out to around 30,000 people, and that it planned to contact everyone within 18 months.
DWP will recalculate State Pension entitlement and inform people if they are owed any arrears. If they are eligible, they are able to claim online.
Sir Steve Webb, former pensions minister who is now a partner at LCP (Lane Clark & Peacock), said: “A lack of protection for time at home with children could make a big difference to pension entitlement of the mother, and lump sum payments thereof. arrears for those affected could run into thousands of pounds. I hope this rectification process will be completed as quickly as possible.”
He added: “The scale of these errors is huge. It is shocking that so many women are being underpaid. This makes it imperative that we get things right as a matter of urgency.”
A Government spokesman said: “We have identified an issue relating to the historical recording of domestic responsibilities protection on the national insurance records of people who first claimed Child Benefit before May 2000 and are correcting it.
“Our priority is to ensure that everyone receives the financial support they are entitled to, and that State Pension underpayment rates due to official error remain low at 0.5% of expenditure. When errors occur, we are committed to fixing them as quickly as possible.”
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