Introduction
Hundreds of thousands of women in the UK are owed thousands of pounds each after a significant error in the state pension system. The Department for Work and Pensions (DWP) estimates that a total of £1.3 billion is owed to those affected.
The Error
Last year, it was revealed that an estimated 210,000 individuals, mostly stay-at-home mothers, missed out on money they were entitled to during retirement. Of those affected, 150,000 are still alive and around 60,000 have passed away.
Amount Owed
All those affected are estimated to be owed an average amount of £5,000 each.
Cause of the Error
The individuals affected are those who claimed child benefit before May 2000, and may have gaps in their National Insurance (NI) record. This, in turn, affects their state pension amount. From 1978 to 2010, a system called Home Responsibilities Protection (HRP) credits helped parents avoid these gaps. However, in 2010, this system was replaced by the current one called NI credits.
Case Study: Mrs. Atkinson
Mrs. Atkinson, now 74, recently received a windfall of £17,000 after falling victim to the state pension error. She applied for HRP in March 2023 and was awarded credit from 1978/79 to 1988/89. After the DWP failed to update her state pension, she sought help from Steve Webb, partner at LCP, who has been campaigning on this issue for over a decade. As a result, she received an increase of £29.68 to her state pension as well as a lump sum of £16,966 for the underpayments since she retired in 2009.
Actions to Take
If you have received child benefit since 1978, it is essential to check your NI record. If any payments are missing, you can fill in a CF411 form on the government's website or contact the HMRC National Insurance helpline for an application form. Your state pension will then be automatically recalculated, and any arrears will be paid.
HRP and NI Credits
Home Responsibilities Protection (HRP) was a scheme to protect parents' and carers' State Pension, which was replaced by National Insurance credits in 2010. If you have questions or think you may be entitled to HRP, you can contact the Pension Service through the gov.uk website or by calling 0800 731 0469.
Conclusion
It is critical that those affected by the state pension error are made aware of the situation and take the necessary steps to rectify it. The DWP will begin contacting individuals who may have been entitled to HRP between 1978 and 2010 but have no record of it in the coming weeks. Correcting errors in NI records could result in increased pension payments and lump sum payments for those affected.
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