HMRC has estimated that around 800,000 self-employed workers could be at risk of missing out on their full State Pension due to errors in their National Insurance (NI) records. Some individuals could lose more than £1,000 a year if the records are left uncorrected, according to MoneySavingExpert.
The issue affects people who registered as self-employed between 2015 and 2024. During this period, in addition to submitting a self-assessment tax return, workers were required to submit a CWF1 form to properly notify HMRC of their self-employed status. Failure to do so could mean missing out on recording NI credits, which in turn impacts pension payments.
Why Have Pensions Been Affected?
To receive the full new State Pension, currently worth £241.30 a week, most people need 35 qualifying years of National Insurance contributions. Self-employed workers build up these years through Class 2 National Insurance. Those with profits of £7,105 or more automatically receive Class 2 NI credits, while those earning less can choose to pay voluntary Class 2 contributions to avoid gaps in their record.
Between 2015 and 2024, newly self-employed people were required to both register for self-assessment and separately notify HMRC using a CWF1 form. In some cases, not submitting the additional form meant Class 2 National Insurance contributions were not recorded correctly.
HMRC says only a minority of people who registered during this period were affected, however estimates the total could be around 800,000, with 160,000 of those already at or within two years of the State Pension age.
What Happens Next?
Most self-employed workers do not need to take any action. HMRC says it will contact everyone affected directly, with notification letters being sent out in stages. HMRC will write to affected customers from spring 2027, with those at or within two years of State Pension age contacted by summer 2027.
Anyone contacted will be directed to the Department for Work and Pensions to check whether the missing NI years have affected their State Pension and whether it is worth making voluntary contributions. Although NI gaps can normally only be filled for the previous six tax years, those affected by this error will be able to pay voluntary contributions going back to 2015 at the original rates.
HMRC advises people not to contact it or try to submit a CWF1 form retrospectively, as this could interfere with the correction process. From spring 2027, affected self-employed workers will also be able to check whether they have NI gaps, see if filling them would increase their State Pension, and make voluntary contributions online.
The problem has now been fixed for new registrations from the 2024/25 tax year onwards.
