The Department for Work and Pensions has confirmed that it has started paying back payments to 187,000 people whose State Pension has been underpaid. The refunds average around £5,000 and relate to people whose National Insurance records were incorrect.
Thousands of people have been given less State Pension than they are entitled to because of Home Liability Protection (HRP) or Universal Credit National Insurance issues. The HRP was a scheme that helped protect parents and carers’ State Pension entitlements and was replaced by National Insurance loans from 6 April 2010.
If someone claimed Child Benefit before May 2000 and did not quote their National Insurance number on their claim, their records may not show the correct number of years they were entitled to HRP, which could affect their State Pension entitlement. The government said women in their 60s and 70s were most likely to be affected.
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The Department for Work and Pensions (DWP) and HMRC are working together to find people affected and change their records to ensure they receive the correct amount of State Pension. The National Audit Office (NAO), which examines public spending for Parliament, said it was estimated that £1.3bn of State Pensions were underpaid to 210,000 people due to historical problems with the HRP. But he said the estimate could range from £310 million to £1.5 billion.
Dame Angela Eagle, Labor MP for Wallasey, has asked the DWP for an update on how many people have been underpaid their State Pension and how much they owe due to incorrectly updated National Insurance records, the Daily Record reports.
Pensions Minister Paul Maynard, Conservative MP for Blackpool North and Cleveleys, confirmed in written responses that the DWP started sending out refunds earlier this year. He said: “The exercise of correcting National Insurance records for people affected by errors in HRP records is ongoing. The HRP correction exercise began with HMRC sending letters in late 2023. Cases notified from HMRC then began to be processed at the DWP in early 2024.”
“In the Department’s Annual Report and Accounts for 2022-2023, the central estimate was of approximately 187,000 cases of possible State Pension underpayment which we expected to correct, with a total underpayment estimate of £1,043 million.”
He explained: “This response covers both missing Home Liability Protection (HRP) and UC National Insurance issues.” Mr Maynard said the average underpayment due for pensioners still alive was £5,000, compared with £3,000 for those who have since died.
Mr Maynard added: “We plan to publish an update to the app in this year’s Annual Report and Accounts. DWP has fixed the UC data issue for cases affected by tax years up to and including the 2022/2023 tax year. This data has been shared with HMRC.
“As HMRC updates NI records, these updates are sent to the DWP. State Pension entitlement will be reassessed and underpayments dealt with accordingly.”
HMRC is using National Insurance records to identify as many people as possible who were eligible for HRP between 1978 and 2010 and who may not have HRP stated on their records. It is sending letters to people who may be affected based on how close they are to State Pension age. First of all, those over retirement age will be contacted. In January, the DWP said the first set of letters had been sent to around 30,000 people and that its intention was to contact everyone within 18 months.
The DWP will recalculate State Pension entitlement and notify people if they owe any arrears. If they are eligible, they can apply online.
Sir Steve Webb, former pensions minister and now partner at LCP (Lane Clark & Peacock), said: “Missing protection for time spent at home with children can make a huge difference to a mother’s pension entitlement and lump sum payments. Debts for those affected can run into thousands of pounds. “I hope this correction process will be completed as soon as possible.”
He added: “The scale of these errors is enormous. It is shocking that so many women are paid so little. This makes it necessary to put things right urgently.”
A Government spokesman said: “We have identified and are correcting an issue with historical records on national insurance records for household liability protection for people claiming Child Benefit before May 2000.
“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 at a low level of 0.5% of expenditure. When errors occur, we are determined to correct them as quickly as possible.”
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