HMRC Pension Correction Initiative One of the most significant pension issues facing HM Revenue and Customs in the UK, is a large number of pension underpayments impacting some 210,000 people, primarily women aged in their 60s and 70s. The reason for this underpayment is HRP credits are not being carried over to National Insurance due to an administrative mistake. This captures people who have received Child Benefit between 1978 and 2000 but did not provide their National Insurance number.
HMRC has been sending out brown envelopes to affected individuals (via The Observer) and advising them about the mistake, as well as how to claim what they are entitled to. The scheme hopes to correct National Insurance records properly reproducing the right number of HRP credits and the average amount of underpayment being redressed thought to be circa £5,000 per claimant.
Context and Reason for the HMRC Pension Correction 2024 Underpayments
The pension underpayments that the HMRC Pension Correction 2024 Initiative is addressing stem from earlier issues relating to Home Responsibilities Protection (HRP) back in the early nineties. HRP was aimed to ensure that mostly women who took time off from job for care.
It should also allow children or other dependents to continue accruing credits towards their state pension. These credits then played an important part as they counted towards completing the years needed to be entitled to a full state pension when people retire.
Yet from 1978 to 2000, a major procedural blunder took place: thousands of people claiming Child Benefit during that time failed to include their National Insurance number on the relevant benefit claim forms. This meant that their HRP entitlements were not accurately reflected in their national insurance records.
Ongoing Activities and Corrective Actions
- A new campaign by HMRC has also commenced to correct this whereby pension underpayments are resulting when unrecorded HRP (Home Responsibilities Protection) credits should have been allocated for certain years.
- It involves notifying pensioners who may have been underpaid by sending letters in plain brown envelopes.
- It informs them of both the possibility that they were underpaid and that they can now claim back payments.
- HMRC issued first notifications late 2023, and the DWP started to run these cases in early 2024.
- This correction process involves a full reconciliation and amendments of the pensioners’ National Insurance records to properly account for all HRP credits between 1978 and 2010.
- The systematic way in which this is being done, it will either correct this underpay or at least ensure that pensioners receive the sums they should have been able to claim.
Scheme Pays Deadline Extended
The mandatory Scheme Pays deadline for 2022/2023 has been extended by HMRC from July 31, 2024 to between now and July 6, 2025. It also gives taxpayers subject to annual allowance (AA) tax charges the time they need to manage their tax affairs. Under the SPPA, a member who exceeds the AA limit or requests an On Demand PSS must receive his/her Pension Savings Statements (PSS), by 6 October in any relevant year.
Digital Services for Tax Corrections
HMRC has launched a digital service which helps affected members of the 2015 Remedy work out any new or adjusted tax charges on pensions as a result of that remedy. It means clients can apply for refunds on any AA tax appear from regular years overpaid, ultimately allowing for better management of their tax positions.
How to Find Out If You Have Been Underpaid
If you are wondering whether your state pension entitlement has been reduced inappropriately because you are due HRP credits but none have been entered onto your record, do the following:
- Review your State Pension Records and National Insurance Records.
- If you had passed your pension age on, or after 5 April 2010, then anything that shows up as HRP or credits on your record is counted as an effective year. If it does not, this can also mean lack of credits.
- Access an Online Tool provided by the UK government through Gov.uk website.
- This can assist you in deciding whether you may be eligible to claim backdated HRP credits.
- This HRP used to be recorded in a different way, for those who would have been of pension age by 5 April 2010.
- You can call the National Insurance helpline to see if HRP was showing up on your record.
- Any discrepancies or uncredited HRP must be claimed by completing the CF411 Form, which needs to be filled out at any time before March 2010.
