MSE News

Warning: 100,000s who took time off work to look after kids could be owed £1,000s in state pension payments – what you need to know

If you're a woman in your 60s or 70s who stayed at home to care for children before 2010, you may be missing out on £1,000s in state pension payments due to errors in your national insurance record. You don't need to do anything for the time being, though you will need to claim your missing state pension payments later this year.

We've given a brief overview of the latest on these underpayments below, but we do plan to publish more detailed guidance in the coming months. You can sign up to our weekly newsletter to ensure you're first in the know when this is ready.

Women in their 60s and 70s are most likely to be hit by this latest error – and could be due back £1,000s

The full 'new' state pension is currently £203.85 a week – but not everyone gets the maximum amount. How much you receive depends on how many 'qualifying' full national insurance (NI) years you have. Most collect NI years through working and paying NI, but you can also get them if you're claiming benefits or caring for others.

The Government has now admitted that around 210,000 people – mainly women – could have been underpaid as much as £1.3 billion due to gaps in their NI records. The average amount of state pension back payment due to this issue is £2,000, with the highest found to be £33,300, according to a report published earlier this month by the National Audit Office. Here are the key need-to-knows:

You could be at risk of a lower state pension due to the issue outlined above if ALL of the following apply:

  • You're currently aged between around 41 and 90. Those affected are mainly women in their 60s and 70s, and many will already be claiming their state pension, but others may still be under state pension age.
  • You took time away from paid work to look after a child at any point between 1978 and 2010.
  • The child you were caring for was under the age of 16 at the time (or under 20 if they were still in education or approved training).
  • You claimed Child Benefit for the first time before May 2000.
  • You didn't include your NI number on your Child Benefit claim.

You are NOT at risk of a lower state pension due to this specific issue if:

  • You first claimed Child Benefit after May 2000. It became mandatory in May 2000 to provide a NI number for Child Benefit claims, and your NI record will therefore have been updated automatically.

If you've been affected, you'll need to make a claim to correct your NI record later this year

HM Revenue & Customs (HMRC), which is responsible for NI records, says it now "intends to begin work to identify people who may be affected". Here's what you need to know about the process:

  • Currently, there is no need to take action if you believe you have been affected.
  • From autumn this year, HMRC will start contacting people likely to have been affected "in phases", according to their age, with further instructions.
  • If you are eligible, you will be able to make a claim online.
  • Once your NI record has been updated, the Department for Work and Pensions (DWP) will recalculate your state pension and make payments for any arrears due.

However, there may be some people who are affected who will not be identified by HMRC's search. This is because Child Benefit records older than five years have now been deleted to comply with data protection.

HMRC says it may widen the search criteria once the initial contact has started, though we don't yet know if people should actively get in touch to ask for their records to be checked. We're pushing for more information and we will update this story and our guides as soon as we know more.

How the issue came about

Since the 1978/79 financial year, the Government has had a system in place to protect the state pension entitlement of those who aren't earning through paid work – mainly mothers – because they've instead chosen to raise a family. The system was initially called 'home responsibilities protection' (HRP), but was then changed to national insurance credits in 2010.

But the Government has admitted the system has been hit with errors. 100,000s who cared for children have gaps in their NI records that shouldn't be there. In this case, the automatic 'home responsibilities protection' entitlement is missing and those affected are receiving – or stand to receive – a state pension underpayment.

This issue of caregivers missing out on state pension payments was first highlighted by Steve Webb, who was previously the Pensions Minister, last year. It followed a report published by the DWP in July 2022, which revealed that this problem was the "second largest" source of underpayments in state pensions.

An investigation into the NI records relating to people who reached state pension age between 1978 and 2010 was then opened. At the time, it was unclear how many people might have been affected or how much they may be due – but we now have a clearer picture.

Others are also missing out on a full state pension due to various errors

As a result of similar corrections in 2011, a share of £83 million was paid to 36,000 people, some of whom also received an average pension increase of £10 a week.

This is on top of errors already being corrected that have affected certain married women, widows and the over-80s. To date, £93.4 million has been paid out to 14,200 women. But it is estimated there are around 230,000 married women, widows and divorcees in total who have been underpaid their state pension. See our Missing state pension payments guide for more on this.

Currently claiming Child Benefit? Check it's in the right name so you don't miss out on your state pension entitlement

In a separate but related issue, it's also important to check your Child Benefit claim is in the right name – otherwise this may also impact the amount of state pension you get in future. According to HMRC, more than 200,000 people are thought to be missing NI credits because Child Benefit claims are in their partner's name.

If your partner doesn't need the NI credits themselves – for example, because they are working and paying NI anyway – you may be able to get the HRP or NI credits transferred to you, provided you reached state pension age after 5 April 2008. You can do this by filling out this form on Gov.uk.

MSE weekly email

FREE weekly MoneySaving email

For all the latest deals, guides and loopholes simply sign up today – it's spam-free!