State pensioners were underpaid by £470 million in the last financial year, according to new data from the Department for Work and Pensions (DWP). The errors are primarily due to inaccurate National Insurance records, which determine the amount of state pension a person receives.
The DWP stated that the main issue relates to the historic recording of Home Responsibilities Protection (HRP), a scheme that ran from 1978 to 2010 to protect the state pension entitlement of those with caring responsibilities. Some individuals have not had all eligible years of HRP recorded on their National Insurance records, leading to incomplete records and incorrect pension payments.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, commented: 'We tend to assume benefits such as state pension will be paid out automatically at the correct rate, but we’re wrong.' She noted that while overpayments stood at £170 million, underpayments were far higher at £470 million, urging people to check their records.
A Government spokesperson said: 'We have identified and are correcting an issue related to the historical recording of Home Responsibilities Protection... HMRC has begun writing to those likely affected.' The DWP noted that the state pension underpayment rate remains low at 0.4 per cent of expenditure.
Gaps in National Insurance records can also occur when people are not working and not claiming benefits. Martin Lewis recently highlighted how a reader boosted their state pension by £21,000 by purchasing missing NI years. HMRC has launched a new online service to help people check for gaps in their record.
