How to get the maximum state pension (from the man who made the rules)

Steve Webb
‘I know of a widow who managed to claim back £118,000’ - Geoff Pugh

Sir Steve Webb was pensions minister for five years in David Cameron’s government and spent much of his working life understanding, and reforming, Britain’s complex pension system. He is a partner at consultants LCP

Earlier this year, the Department for Work and Pensions (DWP) quietly admitted the shocking fact that six in 100 state pension claims are currently being underpaid.

That means of more than 12 million people receiving state pensions, around 750,000 of them are not getting what they are owed.

This guide is about how to find out if you are one of the six in 100 – and, if you are, what you can do about it.

In one case I know of an elderly widow managed to claim back £118,000 she was owed after decades of underpayment. And there will be people who are owed even more.

The errors on state pensions fall into two main categories.

The first is problems with National Insurance (NI) records which feed through into underpaid state pensions. Put simply, the fewer qualifying years of NI payments you have on your record, the lower your state pension will be.

The second is failures by the DWP to adjust people’s pensions post-retirement when something changes – for example a married woman losing her husband.

Let’s consider each in turn.

Parents who had children in the 1980s and 1990s

The biggest single problem with National Insurance records relates to failure to apply “credits” for time bringing up children. DWP has set aside £1bn for payment of arrears to an estimated 187,000 pensioners in respect of this type of error.

Out of this total, 43,000 are now deceased and so payments will have to be made to their estate. Just because someone has died does not mean it is too late to chase up money that should have been paid.

The error relates to what used to be called “Home Responsibilities Protection” (HRP). This was a system introduced in 1978-79 to provide a measure of protection to the National Insurance record of parents who were not making NI contributions because they were at home raising children.

When a person claimed child benefit for a child under 16, Home Responsibilities Protection should automatically have been added to their National Insurance record.

Unfortunately, prior to 2000 it was not mandatory to include a National Insurance number when claiming Child Benefit and without an NI Number there was no automatic link between the Child Benefit computer and the NI computer.

As a result, many thousands of parents never received Home Responsibilities Protection.

Everything you need to know about Home Responsibilities Protection
Everything you need to know about Home Responsibilities Protection

For those who reached pension age from April 6, 2010 onwards, it is relatively easy to check whether this protection was applied.

After this date, the years of protection were converted into full qualifying years towards your state pension and will show as such on your NI record. This group can therefore check their year-by-year NI record and see if there are gaps where NI credits should be present.

For those who reached pension age before April 6, 2010, things are more complex.

Unfortunately, for this group, Home Responsibilities Protection years are not shown in online records. It is therefore necessary to ring up the NI contributions helpline and ask if the correct years have been awarded.

If the protections are missing, you can fill in the standard form (known as a CF411) and submit it, either online or through the post. The bad news? HMRC currently has a waiting time of around 40 weeks to process such applications.

Once your NI record has been updated, DWP should automatically recalculate your state pension, potentially increasing your weekly payment and paying any arrears. Unfortunately – you guessed it – DWP also has backlogs and it may be necessary to chase DWP to update your pension.

The Government says that from autumn 2023 it will be writing out to people who it thinks may be missing out on Home Responsibilities Protection and will encourage them to claim. So you could, in principle, simply wait for such a letter.

However, the Government has little idea who exactly to write to, so there’s a real risk that even if you are missing out you may not get a letter inviting a claim.

Errors in Universal Credit

There are also separate errors on NI records for people who received Universal Credit.

The DWP has recently admitted that millions of people who received Universal Credit in recent years may be missing the automatic National Insurance credits they were due.

DWP says it is fixing this problem, but if you have retired on a pension short of the full amount and drew Universal Credit in the years before you retired, it is worth checking this one out.

Married women and the over-80s

Turning now to the second major category of errors, the three main groups affected are:

1. Married women, who should have got an uplift in cases where their husband retired after March 17, 2008, but this did not happen.

Married women who have been underpaid
Married women who have been underpaid

2. Married women (and some married men) who should have been reassessed when their spouse died but this did not happen.

Widows (and widowers) who have been underpaid
Widows (and widowers) who have been underpaid

3. People over 80-year-old who had previously been on a very low pension and should have been automatically assessed for the over-80s rate – currently £93.60 per week – but this did not happen.

Over-80s who have been underpaid
Over-80s who have been underpaid

The Government says it expects to pay back just over £1.1bn in arrears to around 165,000 pensioners (or their heirs) in respect of these errors.

The Department started a massive checking exercise in early 2021 which will eventually review state pension payments made to roughly two-thirds of a million people. So far around £300m has been paid out, and the correction exercise is expected to run on to the end of 2024.

If you think that you could have been affected, you have two main options.

One is to wait until the official checking exercise reaches your case and wait for your money.

The other is to contact the Department with evidence of why you think you have been underpaid (for example, that you were widowed but your pension remained completely unaltered).

The DWP would strongly prefer not to be contacted while it is carrying out systematic checks, but if you have been underpaid for years and need the money now, you might reasonably think that you shouldn’t have to wait any longer.

If so, you may wish to use your local MP to chase up a response to your application.

Remember, just because the Government has calculated a state pension figure it does not follow that it must be correct. All too often, a system which is meant to pay out after a lifetime of work and contributing is failing to do the job.

Making sure your own state pension is correct could be time very well spent.


How to check you’re getting the state pension you deserve

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Have you managed to claim back underpaid state pension? Let us know in the comments below or email