A pensioner, 74, has been able to get a state pension boost of nearly £30 a week, plus a £16,966 lump sum after she was underpaid for 14 years.
Mrs Atkinson, whose name has been changed, was getting a state pension of £134 a week, based on 29 years of National Insurance contributions during her working life.
Earlier this year, she heard about Home Responsibilities Protection and applied in March.
Mrs Atkinson realised she was among hundreds of thousands of people who have been underpaid about £1billion in state pension due to information missing from their National Insurance records.
HMRC does not know whose National Insurance records are incorrect as Child Benefit receipt data hasn't been retained
PA
The Home Responsibilities Protection (HRP) system, which was replaced with National Insurance credits in 2010, was a scheme to help protect parents’ and carers’ state pension.
Parents – historically mostly mothers – would automatically get HRP if between April 6, 1978 and April 5, 2010, they claimed Child Benefit for a child under 16.
However, in its 2022/23 Annual Report, the DWP admitted in over 200,000 cases, information is missing, particularly for those in receipt of Child Benefit before the year 2000.
The DWP estimates the government will have to spend over £1billion in paying state pension arrears by the time they have sorted out the problem.
The total amount underpaid could be £1.3billion to 210,000 people affected, of which 150,000 are still alive and around 60,000 have now died.
The DWP expects to track down around 187,000 people, or their heirs.
The typical state pension arrears payment in these cases is thought to be around £2,000, according to Sir Steve Webb, but some people will be owed far more than this. This would mean the ‘mean’ payment will be around £5,350.
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Mrs Atkinson, who lives with her husband in Cornwall, received a letter from HMRC in June, saying she had been awarded HRP from 1978/79 to 1988/89, and although she was in work for some of these years, most of them were blanks on her National Insurance record.
It meant HRP for those years would improve her pension. While the DWP had failed to update her state pension, Mrs Atkinson contacted Steve Webb, and she has since been able to get the increased amount and been back paid for the underpayments since 2009.
However, as Child Benefit receipt data hasn’t been retained due to data protection reasons, HMRC does not know whose National Insurance records are incorrect. It's prompted the taxman to plan a two-pronged strategy: writing to those identified as “most likely” to be affected, as well as encouraging people to come forward.
Civil servants told MPs last week that they expected the process of contacting potentially affected parents to start this month, with letters being distributed over an 18-month period.
People who have reached state pension age will be the first to be contacted, and those who meet the relevant criteria will be invited to put in a claim for HRP.
The main rules, which apply from when the system was introduced in 1978/79 are:
- You were receiving Child Benefit in your own name (not that of a spouse or partner);
- Your child was under 16 for the whole of the financial year in question;
- You were not paying the married woman’s ‘reduced stamp’.
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Partner at LCP Steve Webb said the matter is 'truly shocking'
LCP
Former Pensions Minister and partner at LCP Steve Webb said he thinks that because HMRC is not certain who is affected, it seems “very likely” not everyone who is being underpaid will get a letter.
Sir Steve said: “It is truly shocking that so many people have been underpaid because of errors on their National Insurance record for time at home with children.
“It is even worse that tens of thousands of people, mostly mothers, died without ever receiving the correct state pension.
“It is vitally important that HMRC and DWP are open and transparent about this whole process and that every effort is made to track down all those who may be entitled.”
Sir Steve is urging people to check to see if they need to proactively put in a claim, including heirs of potentially affected people who have since died.
A Government spokesperson said: “We have identified and are correcting an issue related to the historical recording of Home Responsibilities Protection on the National Insurance records for people who first claimed Child Benefit before May 2000.
“Most people’s records will be unaffected, and we have launched a new online tool to help people check whether they need to claim. HMRC will also begin writing to those likely to be affected this Autumn.
“Our priority is ensuring everyone receives the financial support to which they are entitled, and state pension underpayment rates due to Official Error remain low at 0.5 per cent of expenditure. Where errors do occur, we are committed to fixing them as quickly as possible.”