Martin Lewis has issued an urgent appeal to all women aged 41-90 who have children, warning they could be owed 'substantial sums' by HMRC. The money-saving expert told listeners on his BBC Podcast earlier this summer that anyone who took a career break during this period may have been 'short-changed' as a result of a significant National Insurance blunder spanning several years - potentially leaving them thousands of pounds worse off.
His warning comes after HMRC stopped writing to those potentially affected, meaning people must now pursue any claims themselves, reports Yorkshire Live.
Why the error happened
He explained: "This is about a state pension error. The reason that I'm doing it now is not because it's new - it isn't new - this has been around for quite a long time and the government were contacting the potentially hundreds of thousands of primarily women aged between 41 and 90 - it isn't only women, it's primarily women and it'll generally be of that age."
"They could be the victim of a state pension error that could mean they're owed a fortune. The government was contacting them but then Steve Webb former pensions minister got in touch with us, with me, and said 'they've stopped contacting them - they're no longer trying to rectify this'."
"They're not trying to rectify it so I'm trying to rectify it by getting it out there."
Who is affected
HMRC has said: "Some people may have Home Responsibilities Protection (HRP) missing from their National Insurance records. This could affect their State Pension."
HRP was a scheme to help protect parents' and carers' entitlement to State Pension. National Insurance credits replaced HRP from 6 April 2010. "The Department for Work and Pensions (DWP) and HM Revenue and Customs (HMRC) are working together to find people affected and correct their records so they receive the correct amount of State Pension."
The Money Saving Expert founder underlined the potentially life-changing consequences, citing listener Cilla, who got in touch to say: 'I've just received 15 years back pay from HMRC of £31,674 for underpayment of my state pension.' The problem could affect anyone who left work to care for a child or a person with a long-term disability over a 32-year period.
How to check
He explained: "From 1978 to 2010 the government had a system in place to protect state pension entitlement for those people who didn't earn enough to accrue a state pension through paid work because they had taken time off work to look after their children or someone with a long-term disability."
"Clearly in that time period it was mainly women who were doing that. It was called Home Responsibilities Protection and it should have been awarded automatically to those claiming child benefit or who'd received income support throughout a full tax year while they were caring for someone with a long-term illness."
"It effectively gave you the national insurance contributions you would have otherwise got. You need around 30 years of national insurance contributions to get the full state pension. If you're short of years you don't get the full state pension."
"If you're missing 15 years, as that case study was, it's a huge amount of money because the state pension once you get to retirement age it you're in it."
Mr Lewis went on to outline which groups of people were most likely to have been affected by the error: "Who is most likely to be affected? Women currently between the age of 41 and 90, though it's mainly women of the age of 60s and 70s. But it could be anyone 41-90 who took time away from paid work to look after a child or a person with a long-term disability at any point between 1978 and 2010 who claimed child benefit or income support for the first time before May 2000."
"So effectively your kids were born before May 2000. You go onto Gov.uk, you find your state pension forecast and you look if you're entitled to the full state pension years. If you're not then you need to check your gaps in national insurance years which you can also do on gov.uk."
"If there are gaps in your record from 1978 to 2010 these were the years you took off work to care for a child or someone with a long-term health condition. You may be missing Home Responsibilities Protection. At that point we're getting technical in what you need to do. Go and look it up there are good guides online on what to do next."
"It's worth checking, it's huge money, these mainly women have been done over by a system error."
The amount of State Pension someone receives is determined by their National Insurance record and the number of 'qualifying years' they have accumulated. Those who claimed Child Benefit before May 2000 and failed to provide their National Insurance Number on the claim may find their National Insurance record does not reflect the correct number of qualifying years of HRP. This could have an impact on their State Pension entitlement.
Women in their 60s and 70s are most likely to be affected. Those who first claimed Child Benefit after May 2000 will not be affected and do not need to get in touch with HMRC. This is because providing a National Insurance Number for Child Benefit claims became compulsory in May 2000. Class 3 National Insurance credits for parents and carers (CPC) available from 6 April 2010 have been recorded correctly, as have partial periods of HRP.
