The Department for Work and Pensions (DWP) has underpaid mothers who are missing key national insurance (NI) credits by an estimated £1bn, it has revealed.
In a new report, the department estimates the 210,000 people owed money are mostly mothers, of whom 43,000 have already died. Average arrears payments would be just over £5,000, but these will vary, depending on how long people have been retired.
The DWP reported an error last year that found that parents who had time off work to look after their children and had not applied for child benefit tax credits could have missed out on vital national insurance credits that could leave them thousands of pounds out of pocket in retirement.
Now, the Government has announced that it will begin a large-scale write-out to parents – mostly women – who may be affected this autumn.
The people contacted will mainly be women in their 60s and 70s who made a claim for child benefit before May 2000.
If they made a claim without putting a NI number on their form, it is possible their credits may not have been transferred to their NI account. These credits were previously known as “Home Responsibilities Protection” or HRP.
HMRC said it will be writing to people who have no HRP on their record and who have gaps in their NI record between 1978 (when HRP was created) and 2010 (when HRP turned into NI credits).
Where errors are found, NI records will be corrected and DWP will then recalculate state pensions and pay arrears where appropriate.
However, the DWP adds that while £1bn is a likely number owed, there is a very large margin of uncertainty and the actual amount owed could be anything between £300m and £1.5bn.
Pension consultancy firm LCP previously campaigned to raise awareness of this issue and launched its own “mothers missing millions” campaign and website to help people work out if they might be affected.
Steve Webb, partner at LCP, said: “The scale of these errors is huge. It is shocking that so many women have been underpaid so much money. This makes it essential that things are put right as a matter of urgency.
“Missing out on protection for time at home with children could make a huge difference to a mother’s pension entitlement, and lump-sum payments of arrears could run into many thousands of pounds for those who are affected.
“I hope this correction process will be completed as quickly as possible, as far too many people have been underpaid for far too long”.
The HMRC should contact those eligible via letter as of this autumn. If they are eligible they will be able to claim online. However, if you are a parent and are sure that you have contributions missing, you can fill in a CF411 form and submit it to HMRC.
People can also look up all their NI contributions online and see which years aren’t complete on the Gov.uk website.
Tom Selby, head of retirement policy at AJ Bell, added: “The most important thing now is that those who have been underpaid are identified as quickly as possible and put back in the position they should have been. Tragically, it is inevitable some will have died before they can receive the compensation they are owed.
“For those who are still alive, it is crucial if you receive post from DWP that you open it and act upon it. You can make your claim online – but if you do nothing, you will get nothing from the government.”
The Government said that “most people’s records will be unaffected”, adding it will shortly be launching a new online tool to help people check whether they need to claim.
A spokesperson said: “Our priority is ensuring everyone receives the financial support to which they are entitled. Where errors do occur, we are committed to fixing them as quickly as possible.”
