Parents who took time off work to raise children since the 1970s have missed out
British mothers could be owed millions of pounds after years of being wrongly short changed their state pension, in the latest of a catalogue of errors by the Government.
In some cases women who took time out of work to raise children were underpaid by as much as £80,000 over the course of their retirement.
Since 1978, parents who take time out of work to care for their children have been granted National Insurance credits for those years to plug any gaps in their record. The system, first known as “home responsibilities protection”, was meant to mean parents could still build up entitlement to the state pension despite not working.
The full state pension is only paid out to those who have at least 35 years of full National Insurance contributions. Anyone falling short will receive a smaller weekly stipend.
However, the system has failed to work under these rules, the Department for Work and Pensions has admitted.
The Government has confirmed that this new error is the second-largest source of mistakes in the payment of state pension, behind the £1.5bn underpayment to married women and widows.
The DWP said it is working with HM Revenue & Customs to assess how many people have been affected and how much they have been wrongly denied.
Sir Steve Webb, former pensions minister and now partner at LCP, who has championed the cause of women against state pension underpayment, urged women to check their records.
“The DWP has admitted that even more people are being underpaid state pension than previously thought, with a whole new category of errors coming to light,” he said.
“Yet again, this error overwhelmingly affects women, and undoubtedly means that many thousands have been underpaid for years.”
Sir Steve has previously said that pensioners “just can’t trust what you are told anymore because so many times it [the DWP] is getting it wrong”.
The problem first came to light more than a decade ago when raised by Sir Steve, which resulted in the Government making payments worth £83m to 36,000 people. However, the number of errors today could “easily” be of a greater scale, he warned.
This latest error is the second large scale mistake on state pensions made by the Department for Work and Pensions. The Government has admitted to underpaying 237,000 women £1.47bn in state pension payments because of errors in pre-2016 state pensions.
The errors related to pensioners who claimed state pension before April 2016 and were entitled to higher rates due to their husbands’ work records.
Posted: Fri Sep 02, 2022 2:52 am