Unresolved state pension underpayments for mothers - Over £500 million in errors left unaddressed across thousands of cases
DWP Under Fire for Sluggish Progress in Resolving State Pension Underpayments
The Department for Work and Pensions (DWP) is facing criticism for its slow progress in rectifying a second batch of state pension underpayments due to errors, impacting approximately 200,000 mothers. These errors stem from inaccuracies in National Insurance records, with women who took time off to raise a family and claimed child benefit before 2000 potentially missing out on higher state pension payments.
As of the latest data from the DWP, which initiated the record checks in March 2021, only 12,000 cases have received arrears payments. The DWP anticipates the problem may persist until 2027/28, raising concerns that parents, primarily mothers, could be foregoing thousands of pounds in compensation.
Steve Webb, partner at pension consultants LCP and a former pensions minister, expressed disappointment with the government's efforts, stating that only a small fraction of the estimated 200,000 affected individuals have received their due entitlements.
In addition to affected mothers, other groups with pension errors due to administrative mishaps include married women, widows, and the over 80s, amounting to a combined value of £594 million.
The affected batch pertains to mothers who did not receive Home Responsibilities Protection (HRP) on their National Insurance record, initially designed to ensure women who took time off to raise a family would have their pension protected with National Insurance credits. However, many child benefit claim forms between 1978 and 2000 didn't include a National Insurance number, leading to disjointed records.
HMRC, responsible for maintaining these records, has destroyed old child benefit records, necessitating a "fishing expedition" where they write to potential victims and encourage them to make a claim. In some instances, HMRC has communicated with very elderly pensioners, urging them to verify their eligibility online or submit additional records.
Webb noted that this approach may be poorly received, given that elderly people might be wary of online scams and find the process cumbersome. In instances where HMRC identifies a potentially eligible woman and receives a claim form, they must then update the National Insurance records before the DWP conducts a state pension reassessment.
Consequently, only 12,000 mothers who have lost out have received payments since the process began five years ago. Roughly 151,000 of the estimated 194,000 affected individuals are still alive, while 43,000 have passed away.
A government representative previously stated that the DWP is addressing an issue related to the historical recording of HRP on National Insurance records for people who first claimed Child Benefit before May 2000. The DWP advises individuals to use the online tool on their website to help determine eligibility and check their records.
For those seeking information, the DWP is anticipated to send payments and correspondence to affected individuals should any underpayments be identified, but it is advisable to independently check using the Pension Service if uncertain.
Personal finance and finance are at the center of concern for many individuals amidst the slow progress made by the Department for Work and Pensions (DWP) in resolving state pension underpayments. The ongoing issue, affecting approximately 200,000 women, could lead to thousands of pounds in lost compensation for parents, primarily mothers.
In light of the potential financial impact, Steve Webb, a pension expert, has highlighted the importance of staying informed and actively checking personal-finance records to ensure qualification for rightful pension entitlements.
