Parents missing out on State Pension

Concerns have arisen that parents who have taken time out from work, for example using BA’s career break options, could be missing out on state pension.

From 1978, National Insurance (NI) credits were available for parents who took time out of employment to bring up children. Up to 2010, these were known as Home Responsibilities Protection (HRP). From 2010 onwards, these are simply known as National Insurance credits.  This information could be missing from the NI records of many people, with women in their 60s & 70s worst affected.

The exact numbers of those affected are still unknown. Some will have died and so their families will be entitled to any arrears. The Department for Work and Pensions (DWP) and HM Revenue and Customs are working jointly to find those affected and correct their records so they receive the right amount of state pension.

There is considerable uncertainty over the amount that could have been underpaid, which could range from £300m to £1.5bn, according to the DWP.  The core estimate is that £1bn is owed to about 210,000 people, of which 43,000 have now died. This equates to an average shortfall of about £5,000 each. However these are estimates with the true number as yet unknown.

If someone claimed child benefit and did not provide their NI number on the claim, their NI record may not show the correct number of qualifying years of HRP or NI credits, which could affect their state pension entitlement. HMRC are working back through records to identify people who might qualify for these missing years.

HMRC intends to write to people who meet the criteria from the autumn, to find out if they are eligible to claim and if so, they can apply online. DWP will recalculate the state pension entitlement and let people know whether they are due any arrears.

Pension consultants LCP have already provided a simple online guide to allow people to check they are not missing out.

ABAP recommends anyone who may be in this situation to start checking now and if necessary contact HMRC using the methods outlined in the LCP guide.