Charity urges women getting Basic State Pension to check for back payments from DWP

The charity Independent Age has launched a new State Pension factsheet providing essential information for older people already claiming the contributory benefit worth up to £221.20 each week, or those nearing the official age of retirement. The helpful guide covers everything you need to know about the payments, including the difference between the New and Basic, when to claim it, deferring, how the amount is calculated and when you might need to pay tax.

However, it also takes a look at historical underpayments and urges those on the Basic State Pension who may have been due National Insurance (NI) ‘top-ups’ to contact the Pension Service to ask them to recalculate their State Pension if they think it might be wrong.

A recent survey carried out by Independent Age found that 41 per cent of people aged 50 and over were anxious about their finances after retirement. Almost half said that they didn’t have much knowledge of what financial options, including the State Pension, would be available to them once they retired.

Independent Age guidance states: “If you qualify for basic State Pension and can claim State Pension ‘top-ups’, these are usually calculated for you. But some people - particularly women who paid reduced NI rates - may have had their State Pension miscalculated and underpaid.

“If you think this affects you, contact the Pension Service to ask them to recalculate your State Pension. You can do this whether you’re claiming or delaying your State Pension. You can also contact our helpline to arrange to speak to an adviser.”

The full State Pension help guide can be found on the Independent Age website here. You can also call them directly on 0800 319 6789.

Reasons for State Pension underpayments

In 2020, the DWP became aware of a number of individuals who had not had their State Pension increased, in accordance with the law, automatically when this should have occurred. This prompted the Department to take action to investigate the extent of the problem.

The latest figures show that 97,016 people over State Pension age - mostly women - have received back payments averaging £2,192, £5,713 and £12,486, depending on their pension category.

The new data shows that 705,688 State Pension cases have been checked for possible errors between January 11, 2021 and February 29, 2024, with a total of £571.6 million owed in underpayments.

This LEAP exercise update provides crucial information for four groups of older people - married women (category BL), people in a civil partnership, widows and those over 80 (category D). These case reviews were due to be completed before the end of 2023 and were reportedly “on track” to be corrected by the end of this year.

There are three broad categories of State Pension underpayments:

  • cases covered by the State Pension Underpayments (LEAP) exercise

  • Home Responsibilities Protection (HRP) cases where HRP has not been recorded accurately on National Insurance records

  • Cases where National Insurance credits need to be updated for people who were claiming Universal Credit.

State Pension Underpayments LEAP exercise

The State Pension LEAP is the DWP’s largest underpayment correction exercise in progress. It has been established to identify where State Pension underpayments may have occurred in respect of the following groups of people:

  • Category BL (Cat BL) - People who are married or in a civil partnership who reached State Pension age before April 6, 2016 and should be entitled to a Category BL uplift based on their partner’s National Insurance contributions.

  • Missed conversions - People who have been widowed and their State Pension was not increased to include any amounts they are entitled to inherit from their late husband, wife or civil partner.

  • Category D (Cat D) - People who reach age 80 and who are getting some Basic State Pension but less than the £85.00 (in 2022-23) and may therefore, subject to satisfying the appropriate residency conditions, be entitled to Cat D State Pension of £101.55 a week.

An elderly woman is sitting on her soda reviewing financial documents
Historical State Pension errors mostly affect women who can ask the DWP to recalculate their payments. -Credit:STOCK PHOTO

State Pension underpayment progress - February 2024

The number of cases reviewed, arrears identified and payments made between January 2021 and February 2024 are listed below.

Married (Cat BL)

  • Cases reviewed: 317,955

  • Underpayments identified: 43,367

  • Average arrears: £5,713

  • Total amount repaid: £243.8 million

Widowed (Cat B)

  • Cases reviewed: 298.099

  • Underpayments identified: 21,175

  • Average arrears: £12,486

  • Total amount repaid: £262.3 million

Over 80 (Cat D)

  • Cases reviewed: 89,634

  • Underpayments identified: 32,474

  • Average arrears: £2,192

  • Total amount repaid: £65.5 million

State Pension underpayments - Home Responsibilities Protection (HRP)

The DWP estimates it underpaid between £300 million and £1.5 billion of State Pension because of errors with the recording of HRP.

HM Revenue and Customs (HMRC) started writing to thousands of older people in September 2023 who may have been underpaid their State Pension due to missing information on their National Insurance (NI) record. The issue affects mostly women in their 60s and 70s who may have HRP missing from their NI record.

HRP was a scheme designed to help protect parents’ and carers’ entitlement to the State Pension and was replaced by NI credits from April 6, 2010. HMRC is using NI records to identify as many people as possible who might have been entitled to HRP between 1978 and 2010 and have no HRP on their NI record.

After May 2000, it became mandatory to include a NI number on claims so people claiming after this point will not have been affected. It is estimated tens of thousands of people are due an average of £5,000 in back payments.

Personal representatives are able to claim on behalf of deceased customers. For more information on eligibility and how to claim, visit the dedicated HRP page on GOV.UK here.

State Pension National Insurance Credits

Some people who received Universal Credit may not have had their National Insurance Credits correctly attributed to their National Insurance record held by HMRC which could affect their State Pension.

National Insurance records are maintained by HMRC based on information from employers through PAYE, Self-Assessment tax returns from the self-employed and information provided by DWP on benefit receipt where that creates a National Insurance credit.

Between 2017-18 and 2022-23 information about Universal Credit entitlements could not be processed by the National Insurance Recording System. National Insurance credits can affect the value of a State Pension award, so there was a risk some people who had claimed Universal Credit and subsequently reached State Pension age may have been underpaid.

During this period the DWP put in place a manual system with HMRC to update an individual’s National Insurance record where they felt they qualified for National Insurance credits in respect of time on Universal Credit.

With the issues now resolved between the DWP and HMRC systems, claims data relating to the affected years can now be successfully processed by HMRC. When these records are updated information will be sent to the DWP who will then correct any State Pension awards that are affected.

How to check if you are affected or make a claim

There are nearly 12.7 million people across Great Britain claiming State Pension, including more than one million in Scotland. Of that overall total, 9.7 million are in receipt of the Basic State Pension and 2.9 million on the New State Pension.

The Basic State Pension is worth up to £169.50 each week and the New State Pension up to £221.20.

A phone call to the Pension Service is the quickest way to find out if you have been underpaid your State Pension. The best number to call is 0800 731 0469 but full contact details can be found on the Gov.uk website here.

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