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Hundreds of thousands of people who receive the state pension could be owed up to £5,000 in underpayments from the DWP.
A recent House of Commons Committee report highlighted that significant state pension underpayments are due to missing Home Responsibilities Protection (HRP) data.
HRP was a scheme to ensure stay-at-home parents and carers were still entitled to a state pension and has since been replaced by National Insurance credits.
According to the report, the Department for Work and Pensions (DWP) identified underpayments in 2021/22 due to gaps in the National Insurance records of people who were historically entitled to the HRP benefit.
The DWP now estimates that 210,000 people may have been underpaid some £1.3billion, “going back decades”. This comes in addition to the underpayment of £1.2billion affecting 165,000 pensioners due to historical errors by DWP that we reported on last year.
According to the report, this could be “potentially” leaving hundreds of thousands of pensioners “out of pocket by an average of £5,000”.
HM Revenue & Customs (HMRC), which administers National Insurance records, said it will be difficult to identify people who have been impacted because it no longer holds the relevant records.
It reportedly plans to contact people it thinks may be affected and invite them to claim HRP. It will then correct the National Insurance record so the DWP can pay back any missing state pension.
HMRC confirmed that any back payments may be subject to a tax charge, but it has not decided how it will deal with this. It has not yet been confirmed when this issue will be fully corrected.
The Public Accounts Committee said it had “serious doubts about the Government’s ability to make accurate and complete payments.”
Dame Meg Hillier MP, chair of the Public Accounts Committee, said: “Many pensioners have been left significantly out of pocket by up to thousands, while DWP has been asleep at the switch.
“These are injustices that may never be corrected for some. We are now in a place where Parliament needs assurance that the state pension is being paid accurately. We expect DWP to respond to our report in a timely fashion, but frankly, paying pension accurately is a basic that we expect from DWP and not recommendations that our Committee ought to be having to make.
“While it is good to see benefit fraud and error fall slightly this year, we are yet to see any significant post-pandemic strides made in addressing it. The DWP’s future strategy relies on assessing many millions of claims over the next few years, and contracting out this work brings its own risks.
“We will be continuing to scrutinise this work closely, as it is essential for public confidence in the system that the Government fights fraud with unswerving determination while ensuring legitimate claims remain undisrupted.”
Pension experts at Spencer Churchill described the findings as a “breach of trust and responsibility” and that the proactive measures are “essential” to prevent such occurences in future.
They said: “The mismanagement of National Insurance records over decades is not just a numerical error, it’s a breach of trust and responsibility. Each of the 210,000 pensioners affected represents an individual story of contributions to our society, and the average sum of £5,000 owed is a testament to their hard work.
“The Department for Work and Pensions must address this error with the urgency it demands.”
For those unsure whether they’ve been affected by this state pension error, Spencer Churchill experts said: “It’s vital to review your National Insurance record and understand your eligibility, particularly concerning Home Responsibilities Protection (HRP).
“Don’t hesitate to seek professional advice if needed. It’s not just about recovering what’s owed; it’s about safeguarding your rights as a pensioner.”
They added that the DWP must not only rectify these errors but also ensure transparent and effective communication with those affected to “rebuild trust” in the pension system. Spencer Churchill said: “Pensioners who suspect they might have been affected by the state pension error to take immediate action.
“Review your pension statements, consult with financial advisors if needed, and ensure you claim what you are rightfully owed. Your financial security in retirement is paramount, and it’s crucial to be proactive in these matters.”
A Government spokesperson told Express.co.uk: “The action we are taking now is correcting historical underpayments made by successive governments – and our priority is ensuring everyone receives the financial support to which they are entitled.
“HMRC has begun writing to those likely affected by issues related to the historical recording of Home Responsibilities Protection on the National Insurance records for people who first claimed Child Benefit before May 2000.”
They noted that it’s the Government’s “priority” to ensure pensioners receive the financial support to which they are entitled and the state pension underpayment rate due to official error “remains low” at 0.5 percent of expenditure.
They added: “Where errors do occur, we are committed to fixing them as quickly as possible.”
The DWP have reviewed over 590,000 cases as part of the state pensions underpayments correction exercise, stating they would “continually review the estimated numbers”.
