£7859 Pension Payout? HMRC Admits Major Error & sent Letters to 370,000 Individuals their families can still Claim on their Behalf

The UK government has uncovered a significant error in state pension calculations, primarily affecting women who claimed Child Benefit between 1978 and 2000. This issue stems from missing National Insurance credits, known as Home Responsibilities Protection (HRP), which were designed to support individuals who took time off work to care for children or family members. As a result, thousands of people may have been underpaid, with average refunds amounting to £7,859.

Let’s dive into the details of this issue, how it affects pensions, and how you can check if you’re entitled to a refund.

Understanding Home Responsibilities Protection (HRP)

HRP was introduced to help parents and carers reduce the number of qualifying years required for a full state pension. This system, however, faced a critical flaw: Child Benefit claim forms prior to 2000 did not require a National Insurance number, leading to potential gaps in HRP records. These gaps may have resulted in lower state pensions for many individuals.

In 2010, HRP was replaced by National Insurance credits, but the errors in earlier records remained unaddressed until now.

Who Is Most Likely to Be Affected?

The groups most impacted by this pension error include:

• Stay-at-home parents who claimed Child Benefit between 1978 and 2000.
• Individuals who received Child Benefit in their name, not their partner’s.
• Women who did not pay the “married woman’s reduced stamp.”
• Pensioners who reached state pension age on or before April 5, 2010.

So far, HMRC has contacted 370,000 individuals regarding these discrepancies. The Department for Work and Pensions (DWP) has issued refunds, with the average payout reaching £7,859. Pensioners in the most vulnerable situations are being prioritized for these corrections.

How Much Has Been Paid Out So Far?

As of September 30, 2024, the government has repaid around £42 million to 5,344 identified cases. Unfortunately, an estimated 43,000 individuals affected by this error have passed away. However, families of deceased individuals can still claim refunds on their behalf, ensuring that their loved ones’ entitlements are not lost.

How to Check if You Have Been Underpaid

If you suspect you might be eligible for a refund, follow these steps to confirm:

Step 1: Review Your National Insurance Record

If you reached pension age after April 5, 2010, your National Insurance record should show HRP or National Insurance credits as complete years. Missing credits could indicate that you’ve been underpaid.

Step 2: Contact the National Insurance Helpline

For those who reached pension age on or before April 5, 2010, HRP may have been recorded differently. In such cases, contacting the National Insurance helpline can help verify your record.

Step 3: Use the Government’s Online Checker

The UK Government has launched an online tool on the GOV.UK website to help individuals quickly check for missing HRP. This is a convenient first step in determining eligibility.

What to Do If You Are Affected

If you confirm that you’ve been underpaid, here’s what you need to do:

1. Gather Necessary Documents
   Collect Child Benefit records, National Insurance statements, and any other relevant paperwork that could support your claim.
2. Submit a Claim
   Contact HMRC or the DWP to formally request a correction to your pension. Include all supporting documents for faster processing.
3. Claim on Behalf of Deceased Relatives
   If your deceased relative was affected, you can file a claim on their behalf by providing evidence of their eligibility and relationship.

This error has had a profound impact on thousands of individuals, primarily women, who took time off work to care for their families. If you believe you or a family member might be affected, reviewing your National Insurance record and using the government’s tools could help you recover any money owed. With the average refund nearing £8,000, it’s crucial to investigate your eligibility and ensure your pension reflects what you’re entitled to.