Martin Lewis’ MoneySavingExpert has issued a warning to 100,000s of parents.
In the latest MoneySavingExpert newsletter the team explained how mums who stayed at home before 2010, may be missing out on £1,000s in state pension payments.
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It comes after the Department for Work and Pensions (DWP) as well as HMRC announced plans to repay these women who have been underpaid for over a decade due to an error.
The error, which was first revealed last year, has seen an estimated 210,000 people in total potentially underpaid.
Most of them are women who were stay-at-home mums.
Writing in the MSE newsletter the team said: “If you’re a woman in your 60s or 70s who stayed at home to care for children before 2010, you may be missing out on £1,000s in state pension payments due to errors in your national insurance record.
“You don’t need to do anything for the time being, though you will need to claim your missing state pension payments later this year.”
In an official report published earlier this month the government has revealed that 187,000 people are owed arrears.
MSE went on to explain that those affected are those who claimed child benefit, largely women, prior to May 2000 as they could have gaps in their National Insurance (NI) record which in turn affects their state pension amount.
The amount of state pension someone gets is based on their NI contributions and the number of “qualifying years” they have.
MSE said: “The average amount of state pension back payment due to this issue is £2,000, with the highest found to be £33,300, according to a report published earlier this month by the National Audit Office.”
From 1978 to 2010, a protection for parents to avoid these gaps was provided by a system known as Home Responsibilities Protection (HRP) credits.
This system was then replaced in 2010 by one we have now, called NI credits.
If someone claimed child benefit before May 2000 and did not provide their NI number on the form, it is possible that their credits may not have been transferred to their NI account from the child benefit computer.
This may affect their pension entitlement and women who are now in their 60s and 70s are most likely to be affected.
Earlier this month, the DWP announced that from autumn this year, it will begin contacting people who might have been entitled to HRP between 1978 and 2010 but have no HRP on their NI record.
MSE added: “Currently, there is no need to take action if you believe you have been affected.
“From autumn this year, HMRC will start contacting people likely to have been affected ‘in phases’, according to their age, with further instructions.
“If you are eligible, you will be able to make a claim online.”
Where errors are found, NI records will be corrected and the DWP will then recalculate state pensions and pay arrears.
This could result in increased pension payments as well as a lump sum payment.
It’s important to note though that some people who are affected won’t be identified by HMRC’s search.
This is because Child Benefit records older than five years have now been deleted due to data protection.
The MSE team said: “HMRC says it may widen the search criteria once the initial contact has started, though we don’t yet know if people should actively get in touch to ask for their records to be checked.”
The HRP error was first raised over a decade ago and the DWP paid out more than £80million to over 30,000 mothers.
Last year, The Sun spoke to Susan Burton, 66, who almost missed out on £50,000 for her retirement because of this error.
If you think you might be affected by the error we’ve explained what you can do now.
What do I need to do now?
Mr Webb said anyone who has received child benefit since 1978 should check their NI record.
If the payment is missing, there is a form that can be filled in to get the information added to your record.
It is called a CF411 form and it can be found on the government’s website.
You can also contact the HMRC National Insurance helpline for an application form.
Your state pension will then be automatically recalculated and the arrears will be paid.
You can still apply for HRP if, for the full tax years (April to April) between 1978 and 2010, if you were either:
- Sharing the care of a child under 16 with a partner you lived with and they claimed Child Benefit instead of you
- caring for a sick or disabled person
Any HRP you had before April 6, 2010, have converted to National Insurance credits.
You must have reached State Pension age on or after April 6 for these credits to go towards your pension.
Home Responsibilities Protection (HRP) explained
HRP was a scheme to protect parents’ and carers’ State Pension.
National Insurance credits replaced HRP in 2010.
Most people got HRP automatically if they were getting child benefit in their name for a child under the age of 16 and they had given the child benefit office their National Insurance number.
If you think you may be entitled, but you have questions, the Pension Service can be reached using the gov.uk website or by calling 0800 731 0469.
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