State pension underpayments: HMRC contacts thousands of women over £1.3bn missing payments

An estimated 210,000 women have missed out on state pension payments due to government errors. HMRC has started sending out letters to those affected - we explain who will receive one, and what to do if you think you're owed money but don't get a letter.

senior woman using tablet
(Image credit: Getty Images)

Thousands of parents (mostly women) who took time out to raise a family are receiving letters from the government explaining that they are entitled to state pension back payments worth £5,000 on average.

The letters relate to missing state pension payments due to government system errors, which resulted in inaccurate National Insurance records. It mainly affects women who are now in their 60s or 70s.

About 30,000 letters have been sent out - the first ones were issued before Christmas - with many more coming in the next 18 months.

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The Department for Work and Pensions (DWP) is also encouraging people to come forward to see if they are missing payments. 

If you have not heard from the DWP yet and think you may be owed money, you may have to contact them to claim your missing payments.

Adam Pope, a pensions specialist at the law firm Spencer Churchill, comments: "It's vital for individuals to be proactive in verifying their state pension records to ensure they receive the benefits they are rightfully owed.

"Pensioners should take the time to open and review letters from government agencies, as they may contain critical information about their state pension entitlements and potential back payments."

State pension underpayments: Who will get a letter? 

HMRC is sending out letters to those who are most likely to have been affected, largely women in their 60s and 70s. 

The government is also encouraging people to come forward if they think they are being underpaid, as it’s estimated it will reach only 90% of cases because it no longer has the necessary records to identify everyone.

“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,” says Steve Webb, former pensions minister and partner at the consultancy LCP. 

“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."

Who is missing out on state pension? 

An estimated 210,000 people are affected, 60,000 of which are now deceased. LCP has estimated the typical state pension arrear is worth around £2,000 – but the average payment is thought to be around £5,000. 

Some people may have credits, previously known as home responsibilities protection (HRP), missing from their NI records. 

HRP was a scheme that helped protect parents’ and carers’ entitlement to the state pension between 1978 and 2010. The mistakes relating to the HRP were recognised in a DWP annual report in July 2022 and described as the “second largest source of error in state pensions”.

If someone claimed child benefit before May 2000 and did not provide their NI number on the claim, their NI record may not show the correct number of qualifying years of HRP, which could affect their state pension entitlement.

A government spokesperson told MoneyWeek: “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.”

How will HMRC contact you over state pension errors? 

The DWP says the first set of letters has now been sent to 30,000 people. More letters will be sent over the next 18 months telling people they are eligible for back payments.

Those who are over pension age are being contacted first and invited to put in a claim if they fit the following criteria: 

  • You were not paying the married woman’s reduced stamp 
  • Your child was under 16 for the whole of the financial year in question 
  • You were receiving child benefit in your own name 

Customers have up to two years to return information to the government and claim a back payment.

Some people who were paid the wrong state pension may have died. In that case, families and executors will be entitled to check the deceased person's eligibility on the government website and make a claim for any arrears. 

State pension errors: The “married woman’s rate” of basic state pension 

The DWP has also admitted to other errors relating to widows and divorcees who could have been underpaid the "married woman’s rate" of basic state pension for years. This separate problem dates back to 1985 and relates to the "old" state pension system.

Married women aged 80 or over are being urged to check if they are receiving their full state pension after a document revealed hundreds of thousands of them are missing out under the underpayment correction scheme. It is thought that just over 130,000 people are affected, at a total of just over £1bn.

In this instance, the DWP has no plan to contact these women, making them responsible for claiming.

If you have the full 30 qualifying years of National Insurance contributions, you’re entitled to the full basic state pension, currently £156.20 per week.

And if you’re married or in a civil partnership, and you both have the full 30 qualifying years, you’ll get double the amount.

However, if you’re a married woman and don’t have the full number of qualifying years, and your spouse retired before April 2016, you could be entitled to the so-called “married woman’s rate” of state pension.

This rate is set at 60% of the basic state pension your spouse gets. So, if your basic state pension payment is less than 60% of your spouse’s, you could be entitled to more.

In other words, married women could be entitled to a higher state pension (up to £85) based on current rates, but only if they claim it from the DWP.

Who’s missing out on the state pension correction scheme?

Before 2008, married women were legally required to claim the top-up, but following a rule change in March 2008, married women in this position should have automatically received an uplift in their state pension to 60% of their husbands' payout.

However, the DWP has excluded the “pre-March 2008” women from the automatic uplift as they were previously responsible for claiming it themselves.

It added it “took a number of steps to inform these individuals about their eligibility,” sent out forms about four months before a customer reached state pension age and men were given an extra claim so their wives could request the top-up.

It was unclear how many women were missing out, but a document discovered by former pensions minister Steve Webb showed that “in the low hundreds of thousands” of women could be in this position.

How can I claim and what state pension will I get?

Women who file a claim to the DWP will get a 12-month lump sum and the right amount of state pension going forward, but they will not get a full back payment covering the lost years.

To check if you are being underpaid, you can use this tool on LCP's website. You can also contact the Pension Service for information about the state pension by calling 0800 731 0469.

Nicole García Mérida

Nic studied for a BA in journalism at Cardiff University, and has an MA in magazine journalism from City University. She joined MoneyWeek in 2019.

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