The UK government has recently announced that it will be reaching out to thousands of older people who may have been underpaid their State Pension due to missing information on their National Insurance (NI) record. This predominantly affects women in their 60s and 70s who do not have Home Responsibilities Protection (HRP) recorded on their NI record.
However, experts warn that the process may take a considerable amount of time, resulting in significant delays for individuals awaiting their rightful payments. In this article, we will delve into the issue, explaining its causes and implications for those affected.
- Understanding the Issue:
The HRP scheme was initially designed to safeguard parents’ and carers’ entitlement to the State Pension. However, it was replaced by NI credits in 2010. Due to missing HRP information on their NI records, approximately 187,000 people are owed an average of £5,000 in back payments from their State Pension. Unfortunately, NI records may not be available for everyone affected, as Child Benefit records are deleted five years after the claim ends. Individuals who claimed benefits after May 2000 are not affected by this issue since it became compulsory to include a NI number on claims from that point onwards. - HMRC’s Efforts:
HMRC is working in conjunction with the Department for Work and Pensions (DWP) to identify those individuals affected and rectify their records to ensure they receive the correct amount of State Pension. The National Audit Office (NAO) estimates that 210,000 people have been underpaid a total of £1.3 billion due to historical issues related to HRP. However, the DWP’s estimate ranges from £310 million to £1.5 billion, leading to uncertainty regarding the exact amount owed. - Process and Timelines:
From autumn onwards, HMRC will commence reaching out to those affected. The process will be phased, prioritizing individuals who have already reached State Pension age. It is important to note that individuals who have passed away may still have eligible family members who can check their eligibility for back payments and make a claim on their behalf. However, due to missing records, HMRC faces a labor-intensive task of examining National Insurance records to identify individuals affected by the HRP issue. - Potential Delays and Concerns:
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, cautions that the process may be lengthy and warns of significant delays before people receive their rightful payments. She emphasizes that many records relating to HRP claims no longer exist, further complicating the identification process. Morrissey suggests that there is a possibility that some individuals could continue to be overlooked, thereby depriving them of their rightful entitlement. - Expert Views and Calls for Urgency:
Sir Steve Webb, former pensions minister now partner at LCP, highlights the magnitude of the errors and expresses concern over the substantial amount of money that women have been underpaid. He emphasizes the urgency of correcting the issue promptly. LCP has been actively campaigning to raise awareness of this problem and offers resources on their website to help individuals determine if they are impacted.
Conclusion:
The UK government’s efforts to rectify underpayments in State Pension due to missing Home Responsibilities Protection information are a step in the right direction. However, the process may take a considerable amount of time, potentially causing significant delays for those eagerly anticipating their back payments. Experts stress the importance of thorough record-keeping and urge the government to expedite the correction process. If you suspect that you may be affected by this issue, it is advisable to stay informed, be patient, and consult official guidance provided by HMRC and DWP.