Underpaid State Pension

Could you be at risk from an underpaid State Pension?  We asked our Tax Partner, Tim Humphries to tell us more.

Between 1978 and 2010, parents who took time off work to care for their children were granted National Insurance credits to compensate for any gaps in their National Insurance record. This program was initially known as Home Responsibilities Protection (HRP), enabling parents to accumulate entitlement to the state pension even without active employment.

This system was replaced from 6 April 2010 so that now National Insurance Credits are awarded based on a claim for child benefit.

Currently, the full state pension is only paid out to individuals with a minimum of 35 years of complete National Insurance contributions. Those with less than 35 qualifying years (or NI credits) will not receive the full amount. So, could you have an underpaid State Pension?

HMRC has recently announced that the current system has not accurately recorded HRP credits for some mothers. Consequently, women who took time off work to raise their children have been underpaid their state pension throughout their retirement in certain cases. 

To address this issue, the Department of Work and Pensions (DWP) is collaborating with HM Revenue & Customs to assess the extent of the problem and determine the amount wrongfully denied to affected individuals.

If you were entitled to HRP between 1978 and 2010, it is strongly advised that you review your National Insurance record to ensure that you received the correct NI credits you were entitled to. You can perform this check yourself by visiting the GOV.UK website: https://www.gov.uk/check-national-insurance-record.

If you would like to speak to a member of our Private Client Tax Team regarding National Insurance, Self-assessment or any area of private client tax, you can contact us online or telephone us on 020 3697 7147.

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