HM Revenue and Customs (HMRC) in the United Kingdom has launched the Pension Correction Initiative, aimed at addressing pension underpayments that have impacted around 210,000 individuals, mainly women in their 60s and 70s. These underpayments are due to administrative errors that occurred when Home Responsibilities Protection (HRP) credits were not transferred correctly to National Insurance records for people who claimed Child Benefit between 1978 and 2000 but did not provide their National Insurance numbers. This led to many individuals receiving lower state pensions than they were entitled to.
As part of the remediation process, HMRC has started sending notification letters in brown envelopes to the affected individuals, informing them of the error and how to claim the money they are owed. The correction process aims to amend National Insurance records accurately to reflect the correct HRP credits. On average, the underpayment being corrected is estimated to be around £5,000 per person.
Cause of HMRC Pension Underpayments
Background of the Issue
The underpayments addressed by the HMRC Pension Correction Initiative stem from an issue with Home Responsibilities Protection (HRP). HRP was introduced to help individuals, primarily women, who took time off work to care for children or other dependents. This scheme allowed individuals to accumulate credits toward their state pension even if they were not in paid employment during those periods.
However, from 1978 to 2000, a procedural error occurred where individuals who claimed Child Benefit did not always provide their National Insurance numbers. As a result, the HRP credits they should have received were not recorded correctly in their National Insurance records, causing a discrepancy in their pension entitlements when they reached retirement age.
The impact of this oversight has been significant, primarily affecting women who were stay-at-home mothers or caregivers during this time. These individuals ended up with lower pension amounts than they were eligible for, and the error remained unaddressed for many years.
HMRC’s Current Efforts to Remediate the Issue
Steps Taken by HMRC
To correct these errors, HMRC has launched an extensive correction campaign. Affected pensioners have started receiving letters in brown envelopes, informing them about the underpayment and providing guidance on how to claim back the missing funds. The Department for Work and Pensions (DWP) began processing these cases in early 2024, following HMRC’s notification.
The correction process includes a thorough review of the pensioners’ National Insurance records, ensuring that all missing HRP credits from 1978 to 2000 are added accurately. This effort will help rectify the underpayments and ensure that individuals receive the full pension amount they are entitled to.
How to Check If You Have Been Affected
If you suspect that you may have been underpaid due to missing HRP credits, here are the steps you can take to check your records:
Review Your State Pension and National Insurance Records
Examine your State Pension and National Insurance records. If you reached pension age after April 5, 2010, your record should show HRP credits as part of your completed years. If these are missing, it could indicate a potential underpayment.
Use the Online Tool for Verification
The UK government offers an Online Checker Tool on the Gov.uk website. This tool can help you determine whether you may be eligible to claim missing HRP credits.
Contact the National Insurance Helpline
For those who reached pension age before April 5, 2010, the HRP credits may be recorded differently. In such cases, it’s advisable to contact the National Insurance helpline to verify whether HRP credits are correctly reflected in your records.
Submit the Correct Forms
If you discover discrepancies or missing HRP credits, you will need to complete the CF411 Form to claim any missing credits for periods prior to March 2010.
By following these steps, you can ensure your records are up to date and make sure that you receive any payments you are entitled to.
Conclusion: Ensuring Fairness for Pensioners
The HMRC Pension Correction Initiative is a significant step towards correcting past errors and ensuring that affected pensioners, especially women who were caregivers, receive the pension benefits they are rightfully owed. Through these efforts, the government is working to provide a fairer and more accurate pension system, helping those who have been underpaid due to administrative oversights.
