PENSION PAIN
Major update for 194,000 women hit by huge state pension error – are you owed £1,000s after being underpaid?
Plus we reveal how you can take matters into your own hands to get cash if you're owed
A HUGE update has been issued for tens of thousands of women affected by a state pension error.
Fresh figures have revealed that just under 200,000 retirees are due payments returned after the mistake resulted in £1.15billion being underpaid.
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The error, which was first revealed in 2022, has seen an estimated 194,000 people miss out on money they're entitled to during retirement - most of them women who were stay-at-home mums.
The annual report by the Department for Work and Pensions (DWP) has been released this week.
It has shown that the process of fixing state pension error is proceeding "at a snails’ pace" according to LCP partner and former pensions minister Steve Webb.
Despite HMRC starting writing out to potential victims last Autumn, the latest report reveals that by the end of March 2024, DWP had assessed just 419 cases.
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Just £2.2million in arrears has so far been paid out compared with an estimated final bill of £1.15billion.
The DWP annual report suggests that out of the total number of pensioners missing out around 151,000 are still alive but 43,000 have died.
The DWP report says that work to fix the problem could continue until 2027/28.
Steve Webb said: "Once the government realised that nearly 200,000 mothers may have been underpaid their state pension, action should have been taken to fix the problem with much greater urgency, especially as many of those who have lost out are now elderly.
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"Instead, DWP has so far assessed fewer than 500 cases out of that total, and the exercise is proceeding at a snail’s pace. When the government talks about continuing the exercise into 2027/28 it is clear that this issue is not getting the priority that it deserves."
When the mistake was uncovered the DWP described it as the "second largest" source of errors in state pensions.
What are the different types of pensions?
Those affected are people who claimed child benefit, largely women who were stay-at-home mums, before May 2000 as they could have gaps in their National Insurance (NI) record which in turn affects the amount of state pension they get.
One of the challenges slowing repayments down is that HMRC has destroyed all its old child benefit records and therefore has to undertake a "fishing expedition" writing out to women potentially affected and encouraging them to make a claim.
The amount of state pension someone gets is based on their NI contributions and the number of "qualifying years" they have.
From 1978 to 2010, protection was provided for parents to avoid these gaps by a system known as Home Responsibilities Protection (HRP) credits.
This system was then replaced in 2010 by the one we have now, called National Insurance Credits.
If someone claimed child benefit before May 2000 and did not provide their NI number on the form, it's possible that their credits may not have been transferred to their NI account from the child benefit computer.
What is Home Responsibilities Protection (HRP)?
BELOW we reveal what Home Responsibilities Protection (HRP) is and why if you received it before 2000 you could be missing out on cash.
From 1978 to 2010, protection was provided for parents to avoid gaps in their "qualifying years" by a system known as Home Responsibilities Protection (HRP) credits.
This system was then replaced in 2010 by the one we have now, called National Insurance Credits.
Most people got HRP automatically if they were getting child benefit in their name for a child under the age of 16 and they had given the child benefit office their National Insurance (NI) number.
If someone claimed child benefit before May 2000 and did not provide their NI number on the form, it's possible that their credits may not have been transferred to their NI account from the child benefit computer.
This may affect their pension entitlement and women who are now in their 60s and 70s are most likely to be affected.
If you think you may be entitled, but you have questions, the Pension Service can be reached using the Gov.UK website or by calling 0800 731 0469.
This may affect their pension entitlement and women who are now in their 60s and 70s are most likely to be affected.
The DWP has already started sending letters to thousands of people who might have been entitled to HRP between 1978 and 2010 but have no HRP on their NI record.
It expects to send several hundred thousand letters to those affected over the next 18 months.
However, in some cases, HMRC has written out to very elderly pensioners encouraging them to check their eligibility on a website before submitting a claim or has asked for records and information about children which parents may not have.
Where errors are found, NI records will be corrected and the DWP will then recalculate state pensions and pay arrears.
This could result in increased pension payments as well as a lump sum payment.
Last year, The Sun spoke to Susan Burton, 66, who almost missed out on £50,000 for her retirement because of this error.
Another woman, 74, has received a £17,000 windfall after falling victim to the error.
It means that finding out if you have been missing out, could mean a big payday.
What are state pension errors?
STEVE Webb, partner at pension consultants LCP and is a 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.
What do I need to do now?
The DWP says it has begun the process by writing to those already over pension age, but so far has not given any update yet on how many letters they’ve sent or what response they have received.
For the tens of thousands of those affected who have died, it will be a matter of tracking down the families of the deceased.
Mr Webb previously told The Sun: "The scale of this problem is such that it is going to take 18 months to try to track down all those who may have missed out.
"But HMRC’s records give them only very limited information about who to contact, so anyone who thinks they were eligible for Home Responsibilities Protection which may be missing from their state pension should check if they were entitled and put in an application."
Anyone who has received child benefit since 1978 should check their NI record.
If the payment is missing, there is a form that can be filled in to get the information added to your record.
It is called a CF411 form and it can be found on the government's website.
You can also contact the HMRC National Insurance helpline for an application form.
Your state pension will then be automatically recalculated and the arrears will be paid.
You can still apply for HRP if, for the full tax years (April to April) between 1978 and 2010, if you were either:
- Sharing the care of a child under 16 with a partner you lived with and they claimed Child Benefit instead of you
- Caring for a sick or disabled person
Any HRP you had before April 6, 2010, have converted to National Insurance credits.
You must have reached state pension age on or after April 6 for these credits to go towards your pension.
Other state pension error news
The annual report also went into detail regarding a previous error affecting married women, widows and the over 80s, which is due to be completed by the end of 2024.
According to the report, just under 100,000 people (99,558) had received payments by the end of March 2024, with a combined value of £594miilion.
This total included around 44,000 married women, 23,000 widows/widowers and 33,000 over 80s.
Around 700,000 pensioners, are also thought to be affected by the same underpayment error and are set to have their entitlements reviewed.
Many of these women did not receive the entitlement they were due under their husband's National Insurance records.
Others did not get the uplifts they were eligible for when their husbands died.
That's what happened to Mary Cunningham, who cared for her husband Harry from 2013, when he began showing signs of dementia, until his death in 2016.
Now Mary, 71, has received a £23,000 windfall after falling victim to the issue.
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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.
Elsewhere, the exact amount you need to retire comfortably – including holidays abroad - has been revealed.
Plus, a Martin Lewis fan has revealed how the expert's little-known tip helped them to boost their state pension by £7,000.
Do you have a money problem that needs sorting? Get in touch by emailing money-sm@news.co.uk.
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