The Department for Work and Pensions (DWP) has confirmed that women affected by state pension underpayments are now falling into back payments averaging around £5,000. These arrears arise from the lack of Family Responsibility Protection (HRP) and problems with National Insurance (NI) credits under Universal Credit.
HRP, NI Credits and Underpayments
The Home Responsibilities Protection (HRP) scheme was designed to protect the State Pension rights of parents and carers. On 6 April 2010, NI credits replaced this scheme.
Currently, HM Revenue and Customs (HMRC) uses NI records to identify people who may have been entitled to HRP between 1978 and 2010 but who do not have an HRP on their NI record.
From May 2000, it became compulsory to provide a NI number for benefit claims. As a result, people who made a claim after this date would not have been affected.
DWP Underpayment Issue
The underpayment issue was raised by Dame Angela Eagle, a Labour MP, who questioned the average value of identified State Pension underpayments.
The DWP Pensions Minister, Paul Maynard MP, responded by stating that ‘the central estimate was around 187,000 cases likely to be underpaid state pension and for which we are planning a correction, with a total underpayment estimate of £1,043 million’.
To address this issue, the DWP has initiated a process to rectify these errors. The Pensions Minister clarified in a recent written statement: "The exercise to correct National Insurance records for people affected by errors in their HRP records is underway".
HMRC began the process by sending letters at the end of 2023. Cases subsequently notified by HMRC began to be processed by DWP in early 2024.
According to the department's 2022-2023 annual report and accounts, the estimated central value of an underpayment was £5,000 for living cases above state pension age and £3,000 for deceased cases. The DWP said that it intended to publish an update on the exercise in this year's annual report and accounts.
Universal Credit Data Issue
The DWP also addressed the issue of Universal Credit data for affected cases up to the 2022/2023 tax year. The Pensions Minister explained: ‘This data has been shared with HMRC. As HMRC updates NI records, these updates are sent to DWP. Any State Pension entitlement will be reassessed, and any underpayments will be dealt with accordingly.’
Furthermore, the DWP has indicated that the correction process should be achieved by the end of 2025. Currently, millions of people in Great Britain receive the State Pension, including more than a million residents of Scotland.
Some 9.3 million of these receive the Basic State Pension, while 3.4 million receive the New State Pension. At present, the Basic State Pension is capped at £169.50 per week, while the New State Pension rises to £221.20.
Anyone who suspects that their state pension has not been paid to them are encouraged to call the Pensions Service. 0800 731 0469 is the number to call, and full contact details are available on the Gov.uk website.