Payouts slow for women shortchanged by State Pension errors

05 September 2024

Written by Retirement Line

Thousands of women across the UK have been underpaid their State Pensions due to errors in their National Insurance records. 

The Department for Work and Pensions (DWP) estimates that nearly 200,000 women, predominantly mothers, are owed a total of around £1 billion due to this oversight. This equates to an average underpayment of approximately £5,000 per person, with many of those affected now in their 60s and 70s.

The root of the issue

The error primarily involves missing Home Responsibilities Protection (HRP) credits on the National Insurance (NI) records of women who took time off work to care for children between 1978 and 2010. 

HRP was designed to protect the pension rights of those who stayed at home to raise children by reducing the number of qualifying years needed for a full State Pension. 

However, a significant number of these women did not have their HRP correctly recorded. This is especially the case for women who:

• Are now in their 60s and 70s.

• Claimed Child Benefit before May 2000.

• Did not provide their NI number when making a Child Benefit claim.

This gap has led to thousands of women receiving less in their State Pensions than they are entitled to.

HMRC is now working through NI records to identify as many people as possible who might have been entitled to HRP between 1978 and 2010, with no HRP on their NI record.

Slow progress in rectification

Whilst the DWP has acknowledged the mistake and has started contacting those affected, progress has been slow. The DWP’s annual report in July revealed that by the end of March 2024, only a small fraction of the affected cases had been reviewed. 

It says that just 419 cases – out of around 194,000 – had been assessed and £2.2 million paid out, despite the total estimated underpayment bill being £1.15bn.

Former Pensions Minister Steve Webb said: 

“Once the government realised that nearly 200,000 mothers may have been underpaid their State Pension, action should have been taken to fix the problem with much greater urgency, especially as many of those who have lost out are now elderly.

“Instead, DWP has so far assessed fewer than 500 cases out of that total, and the exercise is proceeding at a snail’s pace.

“When the government talks about continuing the exercise into 2027/28 it is clear that the issue is not getting the priority it deserves.”

The complexity of correcting historical records, especially given that some Child Benefit records were destroyed, has seemingly made the process laborious. Families of deceased women who were affected by the error are also entitled to claim arrears, adding another layer of complexity to the process.

A broader issue: women disproportionately affected

This issue is one example of how women have been disproportionately affected by State Pension system errors and inequities. 

Historically, women have been more likely to take time out of paid work for caregiving responsibilities, whether for children or elderly relatives. This often leads to gaps in their NI records, resulting in lower State Pension entitlements. Whilst provisions such as HRP have been made by the government to compensate for these gaps, errors have been made and many women have missed out.

For example, prior to the 2016 pension reforms, married women could claim up to 60% of their husband’s basic State Pension. However, many women who should have automatically received this entitlement from 17 March 2008 were underpaid due to errors in the DWP’s systems.

In another case, divorced women who were entitled to State Pensions based on their ex-husband's NI contributions often missed out. So if you are a divorced woman who is not receiving the full State Pension, yet your ex-husband had a full NI record when you divorced, there is a chance you are being underpaid.

As the DWP works to rectify these mistakes, those impacted are encouraged to remain vigilant and proactive in ensuring they receive what they are due. By taking the necessary steps to review your pension records and seek assistance, you can help ensure that you receive the full entitlement that you have earned.

What to do if you think you have been underpaid

If you suspect you might be one of the women affected by these errors, it’s important to take steps to check and rectify your State pension entitlement.

Visit the UK Government's website. Use the government’s online tool to check your National Insurance record and review your State Pension forecast. This will tell you how many qualifying years of NI contributions you have and whether there are any gaps in your record. 

Look for gaps during periods when you were eligible for HRP, such as when you were receiving Child Benefit.If you reached State Pension age after 5 April 2010, HRP or credits will appear as complete years on your record. If they don’t show as complete years, you may have been underpaid.

Use the government’s online claim checker: You can use a Home Responsibilities Protection eligibility checker on the GOV.UK website to check if you need to make a claim. If you notice any discrepancies or gaps, contact HMRC or the DWP to inquire about your eligibility for HRP and whether you might be owed additional pension payments. 

Make a claim. If you are eligible, you'll be able to claim for Home Responsibilities Protection online. If you are over State Pension age and unable to claim online, call the National Insurance helpline for support on 0300 200 3500.

Sources

Nearly 200,000 women owed a total of around £1 billion: HMRC £5,000 warning for more than 200,000 Britons as DWP corrects state pension error. The Express. Accessed 18 August 2024.

Home Responsibilities Protection (HRP) credits missing on the NI records of women: State pension error impacting mothers - have you been underpaid? Which.co.uk. Accessed 18 August 2024.

Some divorced women missing out on State Pensions based on their ex-husband's NI contributions: State pension errors and underpayments: Who is affected? The Times. Accessed 18 August 2024.