In a recent announcement, HM Revenue and Customs (HMRC) confirmed it has sent out more than 370,000 letters to older individuals, primarily women, urging them to review their State Pension records. The letters indicate that many of them may be receiving a lower pension than they are rightfully entitled to. The error stems from missing Home Responsibilities Protection (HRP) periods, which could have led to inaccurate pension payments in the past.
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The Department for Work and Pensions (DWP) has disclosed that those affected by this issue are expected to receive arrears payments averaging £7,859 each. This revelation follows ongoing efforts to rectify these errors, with a special program in place to identify and correct individuals’ records.
What is Home Responsibilities Protection (HRP)?
HRP was a scheme designed to help individuals—particularly women—retain their State Pension entitlement while they took time out of the workforce to care for children or sick family members. HRP was in operation from 1978 until 2010, when it was replaced by National Insurance (NI) credits.
The DWP’s investigation discovered that a significant number of individuals, especially those in their 60s and 70s, had their HRP periods either omitted or incorrectly recorded in their National Insurance records. This issue has affected both those who are already receiving their State Pension and those who have yet to reach the pension age.
Why Did This Problem Occur?
In 2022, the DWP recognized that HRP periods had not been properly applied to some individuals’ National Insurance records. This led to errors in calculating the correct State Pension entitlement. It appears that various historical HRP records were either missing or incorrectly logged, which meant that many individuals did not receive the full amount they were due.
The HRP was specifically designed to account for periods when individuals, especially women, were unable to work because they were looking after children or caring for a sick relative. While this protection helped secure their future pension, the failure to properly include these periods in the National Insurance records resulted in underpayments.
The Scope of the Issue
The underpayment issue potentially affects millions, with estimates suggesting that between £300 million and £1.5 billion in State Pension payments were underpaid due to HRP errors. This affects those who had HRP from 1978 to 2010 but did not see these periods reflected in their NI records.
The HMRC and DWP have been actively addressing the issue by encouraging individuals to check their records. As of now, over 493,000 people have used the online tool available on GOV.UK to determine if they were affected by this HRP omission.
Who is Affected?
Older women are more likely to have been impacted, as HRP was particularly beneficial to women who took time off work to care for children. However, the issue also affects individuals who were caregivers for other family members, including spouses or sick relatives, between 1978 and 2010. People who were foster carers or kinship carers in Scotland between 2003 and 2010 may also be entitled to HRP payments.
It is important to note that the issue does not apply to those who have already received their full entitlement or individuals whose HRP periods were correctly recorded.
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How Can You Check If You’re Affected?
HMRC and DWP have set up a special online tool to help people determine if they may be owed back payments due to missing HRP records. If you are unsure about your National Insurance record, you can use the tool to verify your eligibility. The tool asks questions related to gaps in your NI records, and even if you don’t know some details, you can still proceed by indicating “do not know” for certain questions.
To check your eligibility, visit the GOV.UK website. If you believe you are entitled to HRP payments, you can apply for the corrections exercise, which includes retroactive payments.
What Are the Next Steps for Those Affected?
For those who find that they have missing HRP, the DWP will issue back payments by the end of the year. The DWP has prioritized individuals who are closest to reaching State Pension age, especially those in their 60s and 70s. The next steps are straightforward: those affected can use the online tool to confirm their eligibility and ensure that their records are amended accordingly.
If you find that you are eligible for HRP, HMRC will correct your National Insurance record, and you will receive back payments. The arrears can amount to an average of £5,000 to £8,000, depending on your specific circumstances.
Conclusion
The HRP underpayment issue has affected hundreds of thousands of individuals, particularly older women, and is part of a larger effort by HMRC and DWP to ensure that everyone receives the correct amount of State Pension. If you believe you might be eligible for HRP back payments, it is essential to check your National Insurance record using the online tool at GOV.UK. With the deadline for back payments fast approaching, now is the time to act and ensure that you are receiving all the benefits you deserve.
By actively addressing the missing HRP periods, HMRC and DWP aim to provide the compensation that older individuals, especially those in their 60s and 70s, are entitled to, and ensure that these historical errors do not continue to affect their pension payments moving forward.
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