Every effort must be made to track down people who may be missing out on state pension money due to vital information being absent from their national insurance (NI) records, a former pensions minister has urged.
Some people may have home responsibilities protection (HRP) missing from their NI records.
HRP was a scheme to help protect parents’ and carers’ entitlement to the state pension. NI credits replaced HRP from April 6 2010.
The Department for Work and Pensions (DWP) and HM Revenue and Customs (HMRC) are working together to find people affected and correct their records so they receive the right amount of state pension.
HMRC will start writing to people, many of them older women, this autumn, to find out if they have information missing from their NI records that could affect their pension.
But former Liberal Democrat pensions minister Sir Steve Webb said that, because HMRC is having to make an “educated guess” as to which groups of people are most likely to be affected, it appears likely that not all of those who are being underpaid will receive a letter, meaning some may be dependent on seeing general publicity and proactively putting in a claim.
If someone was underpaid but has since died, their heirs would need to claim.
The National Audit Office (NAO), which scrutinises public spending for Parliament, previously said it is estimated that 210,000 people have been underpaid £1.3 billion of state pension due to historical issues relating to HRP.
But it said the estimate from the DWP is “very uncertain” and could range from £310 million to £1.5 billion.
Women aged in their 60s and 70s are most likely to be affected, the Government has said.
Sir Steve highlighted the case of a 74-year-old woman living in Cornwall, who was being paid a state pension based on her NI contributions and heard about HRP earlier this year. She made inquiries and was told by HMRC that she had been awarded HRP from 1978/79 to 1988/89.
Although she was working for some of these years, most of them were blanks on her NI record, so HRP for those years would improve her pension.
She contacted Sir Steve, who took up her case, and she has received an increase to her state pension, plus a lump sum of nearly £17,000 for the previous underpayments.
Sir Steve, who is now a partner at consultants LCP (Lane Clark & Peacock) said: “It is truly shocking that so many people have been underpaid because of errors on their national insurance record for time at home with children.
“It is even worse that tens of thousands of people, mostly mothers, died without ever receiving the correct state pension.
“It is vitally important that HMRC and DWP are open and transparent about this whole process and that every effort is made to track down all those who may be entitled.”
A Government spokesperson said: “We have identified and are correcting an issue related to the historical recording of home responsibilities protection on the national insurance records for people who first claimed child benefit before May 2000.
“Most people’s records will be unaffected, and we have launched a new online tool to help people check whether they need to claim. HMRC will also begin writing to those likely to be affected this autumn.
“Our priority is ensuring everyone receives the financial support to which they are entitled, and state pension underpayment rates due to official error remain low at 0.5% of expenditure. Where errors do occur, we are committed to fixing them as quickly as possible.”
