Some State Pension women owed almost £8,000 in underpayments

HM Revenue and Customs (HMRC) is currently undertaking a State Pension corrections exercise to address missing periods of Home Responsibilities Protection (HRP), which has led to the Department for Work and Pensions (DWP) issuing incorrect payments.

Between January 8 and September 30, 2024, a total of 5,344 cases of underpayment were discovered, leading to an accumulated debt of roughly £42 million. Data recently published by the DWP regarding their efforts to correct these past inaccuracies indicates that the mean compensation amount is about £7,859.

Steve Webb, the former Liberal Democrat pensions minister who has been investigating issues with State Pension calculations, believes that the figures from the ongoing HRP operation are set to significantly increase as the investigation progresses, reports the Daily Record .

Reflecting on a similar HRP effort from over ten years ago, which saw State Pension arrears payments totalling £83 million, Sir Steve, now a partner at LCP (Lane Clark and Peacock), expressed his concern: "The vast majority of those who lost were women, some of whom were underpaid for decades or even went to their grave never paid the right State Pension.

"The remaining corrections need to be handled as a matter of urgency. This should never be allowed to happen again."

Rachel Vahey, a high-ranking official at AJ Bell and the firm’s leader for public policy, has forcefully highlighted the severity of the problem: “This represents one of the most significant benefit scandals in recent history. The Department for Work and Pensions’ errors have resulted in numerous pensioners – predominantly women – receiving less than they should from their State Pension.”

She insists that resolving this matter is imperative: "It is absolutely critical all those affected by this scandal receive the money they are owed as quickly and efficiently as possible."

In reply, a representative from the DWP stated their dedication to supporting pensioners, saying: “Our main focus is guaranteeing that pensioners get the respect and safety they are entitled to during their retirement, while also keeping the rate of state pension underpayments as minimal as we can. Most cases within this initiative have been successfully resolved according to plan; however, some are still pending due to additional paperwork required from the customers.”

Reparation for those impacted is expected to be finished by the end of the year.

Previously, the DWP has stated that individuals nearing their State Pension age, particularly those in their sixties and seventies, are initially reached out to through letters.

HRP underpayments explained

Regarding HRP underpayments, the DWP had uncovered last year that there were a significant number of State Pension cases where it appeared that Home Responsibilities Protection (HRP) periods had been neglected, leading to erroneous State Pension payouts.

Subsequent probes revealed that these discrepancies stem from inaccuracies in the National Insurance records overseen by HMRC for many individuals, both younger and older than the State Pension age.

The Department for Work and Pensions (DWP) and HM Revenue and Customs (HMRC) have launched a Legal Entitlements and Administrative Practice (LEAP) corrections exercise. The aim is to identify those who may have been affected, invite them to apply, correct their records, and make both back payments and ongoing revised State Pension payments.

The DWP has estimated that due to errors in recording Home Responsibilities Protection (HRP), it underpaid between £300m and £1.5 billion of State Pension. As per the latest figures, 493,813 individuals have used the online tool on GOV.UK to check if they are missing HRP from their State Pension.

By the end of September last year, HMRC had processed 37,289 applications from individuals above state pension age and 5,428 from those under 66 years old.

What is HRP?

The initiative aimed at safeguarding the State Pension rights for parents and caregivers was implemented from April 6, 2010. It has since been superseded by National Insurance credits.

HMRC is utilising NI records to identify as many individuals as possible who might have been entitled to HRP between 1978 and 2010 and have no HRP on their NI record.

Following May 2000, it was mandated to attach an National Insurance number to all claim forms. Hence, individuals who submitted their claims post this date would not have faced any impact from this requirement.

Prior to beginning the online HRP verification, make sure you are prepared.

Prior to starting the online HRP verification process, you'll be asked whether there are any breaks in your National Insurance record. Should you struggle to find your National Insurance details online or feel uncertain about answering these queries, selecting 'Don’t know' is an option; subsequently, instructions will be offered on obtaining this data.

How to utilise the online HRP tool

You could still qualify to apply for Home Responsibilities Protection (HRP) for complete tax years running from 6 April to 5 April during the period from 1978 through 2010, provided specific criteria are met.

• You were saying you needed Child Benefit for a child under 16.
• You were looking after a child together with your partner, who received the Child Benefit instead of you.
• You received Income Support as you were looking after someone who was either ill or had a disability.
• You were looking after someone who was ill or had disabilities and claimed specific benefits.

Who qualified automatically for HRP

The GOV.UK guidance explains that most individuals automatically received HRP if they met certain requirements:

• getting Child Benefit in their name for a child under the age of 16 and they had given the Child Benefit Office their National Insurance number
• getting Income Support and they did not need to register for work because they were caring for someone who was sick or disabled

A comprehensive guide to HRP can be found on GOV.UK here.