30 Jul 2024

State pension error impacting mothers - have you been underpaid?

The government has assessed 419 cases so far

The government has been accused of proceeding 'at a snails' pace' as it fixes state pension payment errors affecting nearly 200,000 mothers - with just 419 cases assessed as of March this year.

The Department for Work and Pensions (DWP) is in the process of repaying a large number of parents, mostly mothers, who were underpaid their state pension due to an error relating to 'Home Responsibilities Protection' (HRP), which is missing from their National Insurance record.

According to DWP's annual report and accounts for the previous tax year (2023-24), just £2.2m out of an estimated provision of £1.15 billion had been paid out so far, as of March this year.

The HRP error is in addition to the six state pension errors uncovered by former pensions minister Steve Webb and the scandal surrounding groups of women who are underpaid their state pension.

Here, Which? explains the error and how to check whether you are receiving the right amount of state pension.

Why were mothers underpaid?

This error relates to HRP not being recorded accurately on National Insurance records.

For those who reached state pension age before 6 April 2010, HRP reduced the number of qualifying years needed to qualify for a basic state pension in instances where someone stayed at home and cared for children for whom they received child benefit, or cared for a person who was sick or disabled.

For those who reached state pension age after 6 April 2010, previously recorded periods of HRP were converted into National Insurance contributions.

The DWP report said that errors have occurred where periods of HRP were due but not recorded accurately on someone’s National Insurance record.

Although the state pension is calculated and administered by the DWP, it uses National Insurance records supplied by HM Revenue and Customs (HMRC).

The DWP said this is the second-largest source of state pension errors after the current correction exercise.

Find out more: National Insurance rates and contributions

Who may be affected?

The DWP said that women who are in their 60s and 70s and who made a claim for child benefit before May 2000 are most likely to be affected.

If you made a claim without putting your NI number on the application, it's possible your credits may not have been transferred to your NI account.

However, it's not possible for the DWP to identify everyone who may be missing HRP, as child benefit records are deleted after five years due to data protection.

Therefore, HMRC is using NI records to identify as many people as possible who:

might have been entitled to HRP between 1978 and 2010
have no HRP on their NI record

If you first claimed child benefit after May 2000, you will not be affected as it became mandatory to provide an NI number for the claim.

Class 3 NI credits for parents and carers available from 6 April 2010 have been recorded correctly, as have partial periods of HRP.

Find out more: how much state pension will I get?

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What's being done to fix the error?

The DWP is in the process of repaying those who were underpaid, with HMRC writing to affected mothers last autumn. However, the DWP estimates that it could take until 2027-28 to fix the problem.

By the end of March 2024, the DWP had assessed 419 out of 194,000 anticipated cases.

The annual report said it isn't possible to identify individuals affected or to correct their records automatically. Instead, people who may be affected are identified by HMRC via a scan of their systems and then invited to make an application to HMRC for any missing HRP years.

There is a tool on GOV.UK under ‘Home Responsibilities Protection’ to help people check whether they need to claim.

Once a claim is received, HMRC has to update the NI record before the DWP recalculates the state pension entitlement for those over state pension age, and then it can let them know if they are due arrears.

HMRC will then collect any income tax due on an increase in state pension or on any arrears paid. This is because a change in income could affect the amount of tax paid or the benefits you're entitled to.

Find out more: Income tax on your pension

How to check if you're impacted

HMRC has now finished writing to everyone over state pension age who they have identified could be affected by missing Home Responsibilities Protection. It is now writing to people under the state pension age who could be affected.

If you are eligible, you'll be able to claim online. Those who are over state pension age and unable to claim online can call the National Insurance helpline for support on 0300 200 3500.

Anyone who has yet to receive a letter from HMRC or has not yet acted upon a letter can still check to see if they are eligible and find out how to make a claim by visiting the government website - this includes people under state pension age who think they may be affected.

In the meantime, you can check your NI record on the government website and your state pension forecast.

Find out more: National Insurance and your state pension

'Government working at snail's pace'

Former pensions minister Steve Webb accused the government of working at a 'snail's pace' to repay those affected.

In 2022, Lane Clark and Peacock (LCP), along with Webb - who is a partner at the firm, launched a campaign called ‘Mothers missing millions’ to raise awareness of the error.

The firm said its dedicated website has had thousands of visits and, as a result, is starting to hear from people who have secured a backdated lump sum for payments they missed out on and will receive higher pension payments going forward.

This includes one case where an elderly widower was able to put in a posthumous claim for his late wife’s missing HRP and received a lump sum of more than £4,000. In another case, a woman received a state pension uplift of £50 a week.

LCP said a substantial number of those who missed out have now died, and any payment due would go to their estate. The DWP annual report suggests that out of 194,000 mothers missing out, around 151,000 are still alive, but 43,000 have died. It said many of the remaining mothers are now elderly, adding to the urgency of the problem.

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.

'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.'

In response, a spokesman from the DWP said: 'Most people’s records will be unaffected, and we have an online tool to help people check whether they need to claim.

'State pension underpayment rates are very low, but where errors do occur, we are committed to fixing them as quickly as possible.'

What about other state pension errors?

In 2022 six further state pension errors were uncovered following an FOI by LCP.

The DWP is currently undertaking an official correction exercise - known as a Legal Entitlements and Administrative Practices (LEAP) process – to correct the official errors where some groups of pensioners were found to have been underpaid their state pension.

To date, the government has repaid £594m to 99,558 individuals who were underpaid their state pension due to system errors. This total includes around 44,000 married women, 23,000 widows/widowers and 33,000 people over 80s.