The Department for Work and Pensions (DWP) has provided an update on the ongoing correction of state pension underpayments affecting specific groups of individuals. These underpayments, stemming from administrative oversights, have impacted hundreds of thousands, particularly women, with significant sums owed.
General Points Regarding Underpayments
The DWP’s Legal Entitlements and Administrative Practice (LEAP) exercise and Home Responsibilities Protection (HRP) corrections have revealed extensive state pension underpayments:
- LEAP Exercise: Between January 2021 and September 2024, the DWP identified 119,050 cases, issuing back payments averaging £11,905 per individual.
- HRP Corrections: HMRC uncovered an additional 5,344 underpayments from January to September 2024, averaging £7,859 per individual.
Together, these exercises aim to correct errors impacting married women, civil partners, and individuals over 80 under specific pension categories.
Causes of State Pension Underpayments
Three primary categories of underpayments have been identified:
- LEAP Cases:
- Errors primarily impacted married women and individuals over 80, whose pension amounts were not automatically increased as required by law.
- Home Responsibilities Protection (HRP):
- HRP was designed to protect parents’ and carers’ pension entitlements. Missing HRP records on National Insurance (NI) accounts led to substantial underpayments.
- Universal Credit Claimants:
- Errors in updating National Insurance credits for people receiving Universal Credit also contributed to discrepancies.
Financial and Administrative Impacts
Scale of Underpayments
The DWP estimates that HRP-related errors alone account for between £300 million and £1.5 billion in underpaid pensions. This issue predominantly affects women in their 60s and 70s, with missing HRP data from their NI records for the years 1978–2010.
Communication and Outreach
By September 2024:
- Over 370,000 letters have been sent by HMRC to individuals potentially affected by HRP errors.
- Many of these individuals are now eligible for an average of £5,000 in back payments. Claims can also be made on behalf of deceased individuals.
The DWP’s timeline aims to complete the correction of widowed cases by the end of 2024, with further efforts to notify and compensate affected individuals.
Addressing the HRP Issue
The HRP scheme, operational from 1978 until its replacement in 2010 by National Insurance credits, aimed to safeguard pension rights for carers and parents. However, missing HRP data on NI records has created gaps, leading to unpaid entitlements.
To mitigate this:
- HMRC is conducting a review of NI records to identify as many eligible individuals as possible.
- Claims filed post-May 2000 are less likely to be affected due to the mandatory inclusion of NI numbers in pension applications after this date.
Steps to Check Eligibility and Claim
Affected individuals or their representatives can verify their eligibility and file claims through dedicated online resources or by contacting the relevant government departments. More detailed information and assistance are available on the GOV.UK HRP page.
