DWP starts sending out £5k backpay to 187,000 people over State Pension errors

The Department for Work and Pensions has confirmed it has started issuing backpay to 187,000 people who have been underpaid State Pension. The backpayments average around £5,000 and relate to people with incorrect National Insurance records.

Thousands of people were given less State Pension than they were entitled to receive, either because of missing Home Responsibilities Protection (HRP) or Universal Credit National Insurance issues. HRP was a scheme to help protect parents' and carers' entitlement to a State Pension and was replaced by National Insurance credits from April 6, 2010.

If someone claimed Child Benefit before May 2000 and did not provide their National Insurance number on the claim, their records may not show the correct number of qualifying years of HRP, which could affect their State Pension entitlement. Women in their 60s and 70s are most likely to be affected, the Government said.

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The Department for Work and Pensions (DWP) and HMRC are working together to find people who have been affected and amend their records so they receive the right amount of State Pension. The National Audit Office (NAO), which scrutinises public spending for Parliament, estimated that 210,000 people have been underpaid £1.3 billion in State Pension due to historical issues relating to HRP. But it said the estimate could range from £310 million to £1.5 billion.

Dame Angela Eagle, Labour MP for Wallasey, asked the DWP for the latest update on how many people were underpaid State Pension due to incorrectly updated National Insurance records and how much they are owed, the Daily Record reported.

Pensions Minister Paul Maynard, the Conservative MP for Blackpool North and Cleveleys, confirmed in written responses that the DWP started sending out backpayments earlier this year. He said: "The exercise to correct National Insurance records for those individuals impacted by errors in their HRP record is underway. The HRP corrections exercise started with HMRC dispatching letters in late 2023. Cases subsequently notified from HMRC started being processed in DWP in early 2024.

"In the Department’s Annual Report and Accounts 2022-2023, the central estimate was around 187,000 cases who may have an underpayment of State Pension and for whom we expect to correct, with a total underpayment estimate of £1,043 million."

He explained: "This response covers both missing Home Responsibilities Protection (HRP) and UC National Insurance issues." Mr Maynard said the average underpayment due is £5,000 for those pensioners who are still alive, and £3,000 for those who have since died.

Mr Maynard added: "We intend to publish an update on the exercise in this year’s Annual Report and Accounts. DWP has corrected the UC data issue for the cases impacted for the tax years up to and including the tax year 2022/2023. This data has been shared with HMRC.

"As HMRC updates NI records, these updates are sent to DWP. Any State Pension entitlement will be reassessed, and any underpayment addressed accordingly."

HMRC is using National Insurance records to identify as many people as possible who might have been entitled to HRP between 1978 and 2010 but don't have it listed on their records. It is sending out letters to people who may have been affected, in order of how close they are to State Pension age. Those over pension age will be contacted first.

In January, the DWP said the first set of letters had gone out to around 30,000 people, and the intention was to contact everyone within 18 months. DWP will recalculate the State Pension entitlement and let people know whether they are due any arrears. If they are eligible, they are able to claim online.

Sir Steve Webb, a former pensions minister who is now a partner at LCP (Lane Clark & Peacock) said: "Missing out on protection for time at home with children could make a huge difference to a mother's pension entitlement, and lump sum payments of arrears could run into many thousands of pounds for those who are affected. I hope that this correction process will be completed as quickly as possible."

He added: "The scale of these errors is huge. It is shocking that so many women have been underpaid so much money. This makes it essential that things are put right as a matter of urgency."

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.

"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% of expenditure. Where errors do occur, we are committed to fixing them as quickly as possible."

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