Nearly 200,000 people could be entitled to thousands of pounds worth of compensation from the tax office. Historical system errors mean people who stayed at home to look after a child or be a carer between 1978 and 2010 could wrongly have gaps in their National Insurance records, denying them a full state pension.
The issue relates to Home Responsibilities Protection (HRP), which was replaced by National Insurance (NI) credits in 2010. People received HRP automatically if they claimed Child Benefit for a child under 16, or Income Support because they were looking after a sick or disabled person and were not able to work. However, it has since been discovered that the system failed to accurately record HRP credits for some claimants after the shift to NI. Those who are affected will not have received, or be on track to receive, the correct amount of state pension.
To receive the full new state pension, people typically need around 35 National Insurance contributions, but this number varies, and some people need more.
HMRC is in the process of contacting those affected. So far, more than 300,000 people have been written to. However, around 194,000 people are still thought to have incorrect NI records.
The average underpayment is estimated to be around £5,000; however, it could be much more in some cases.
One woman emailed the team at Martin Lewis’s Money Saving Expert to share that she received 15 years’ worth of back pay from HM Revenue and Customs (HMRC), totalling a staggering £31,674.
However, in its latest annual report, the Department for Work and Pensions (DWP) has significantly reduced the funds allocated for repayments from £1.2billion to just £29.8million. This change is attributed to a low public response to requests for individuals to check their records and claim the missing credits.
The report reads: “Correcting HRP is inherently challenging. The number of people applying to correct their missing HRP has been low. Substantial numbers of people have not responded to the Government calls for them to apply to add missing HRP, and the exercise has resulted in much lower activity levels.”
People are being urged to be proactive and check their records to claim their missing credits back. You can check your NI record online or using the free HMRC app. The quickest way to claim missing HRP credits is online, though support is also available by calling the National Insurance helpline on 0300 200 3500.
To apply, individuals must complete form CF411, available on the Government’s website. Once approved, HRP credits can be added retroactively to an NI record, potentially increasing pension entitlements and triggering back payments.
Former pensions minister Sir Steve Webb described the DWP’s latest report as « a hammer blow to over 100,000 mothers who are receiving reduced state pensions because of errors on their National Insurance record. »
He said: “The Government’s letter-writing campaign has been a dismal failure, and this was entirely predictable given its reliance on a complicated online claims process.”
A Government spokesperson said: “We are determined to help people who have been left out of pocket as a result of historical errors which are no fault of their own. That’s why we wrote directly to over 370,000 of those who were potentially affected and launched an online tool to help people check if they needed to claim.
“We carried out an extensive campaign to raise awareness of the issue and will continue regular communications to get people to check their National Insurance record.”
