In the next few months, thousands of women across the UK could be alerted by HM Revenue and Customs to potential National Insurance (NI) record gaps due to missing Home Responsibilities Protection (HRP), potentially affecting their State Pension. An estimated 210,000 women in their 60s and 70s might qualify for a hefty back payment and higher future State Pension sums due to historical omissions.
However, words of caution have been issued by an ex-Department for Work and Pensions (DWP) employee: Claiming HRP online might backfire financially for those currently benefiting from Pension Credit. The veteran benefits advisor, with over 40 years behind them, warned the Daily Record: “If you are in receipt of Pension Credit, any increase in State Pension may mean that you are no longer entitled to Pension Credit, so in some cases it might not be worth claiming HRP and getting the increased amount of State Pension.”
Recent DWP data indicates a staggering £1.5 billion underpayment in State Pensions.
This former benefits guru further highlighted that the magnitude of back payments hinges on NI contributions transferred between spouses, impacting married women and individuals in civil partnerships heavily.
Married women and civil partnerships
A former Department for Work and Pensions (DWP) insider has revealed the intricate details concerning State Pension arrears and their connection to missing Home Responsibilities Protection (HRP) years on National Insurance (NI) records, as reported by the Daily Record. They said: “Any arrears of State Pension as a result of missing HRP years from people’s NI accounts, will need to be offset against State Pension paid and this includes the Category BL award.”
Category BL (Cat BL) – People who are married or in a civil partnership who reached State Pension age before April 6, 2016 and should be entitled to a Category BL uplift based on their partner’s National Insurance contributions. This can increase State Pension by up to 60%.
Married individuals or those in civil partnerships who reached State Pension age before April 6, 2016, may qualify for a Category BL increase based on their partner’s NI contributions, which could boost their State Pension up to 60%.
Going back in history, the source noted that until April 1978, there weren’t any mechanisms to protect women who left work to care for children, often leading to them having fewer qualifying years for Basic State Pension. Take the situation where a woman starts receiving her State Pension at 60 but can only claim 30% of the Basic State Pension based on her own NI contributions.
The anonymous ex-DWP employee further illuminated: “Also prior to April 2010, a woman needed 39 qualifying years for the 100 per cent rate of Basic State Pension. For the minimum amount of State Pension to be paid which was 26 per cent, a woman needed 9 qualifying years.”
They pointed out that some women receive a State Pension based solely on the Graduated Retirement pension scheme, resulting in a meagre weekly amount. The ex-employee elaborated on the impact for married women: “When a woman’s husband reached age 65 and claimed his State Pension, then any Basic State Pension she had would be increased to the 60 per cent rate using her husband’s NI contributions, if her own State Pension on her own contributions was less than this 60 per cent.”
She added that if the NI record is corrected due to missing HRP years, but the updated basic amount doesn’t lift her Basic State Pension above the 60 per cent threshold, she’ll only get backdated HRP from her 60th birthday until her husband turned 65.
However, if the HRP adjustment increases her Basic State Pension beyond 60 per cent, arrears are owed from her 60th birthday, considering any 60 per cent Cat BL Basic State Pension before paying any arrears. For divorced or widowed women, the former DWP worker noted: “Any woman who is awarded the 100 per cent Basic State Pension due to being widowed or divorced, then any increase in Basic State Pension due to missing HRP years will not have any effect from the date that the 100 per cent Basic State Pension was awarded.”
Women who reached State Pension age post-April 2016, with a State Pension based solely on their own National Insurance (NI) record, will not be affected by the 60 per cent Category BL increase but are entitled to all back payments owed from any missing Home Responsibilities Protection (HRP) years. An expert has highlighted, however, that increases in weekly State Pension for those already receiving Pension Credit could potentially terminate their entitlement to that and related benefits.
The benefits specialist noted: “Basically any arrears of state Pension due from missing HRP years, will need to be offset against the amount of State Pension which has been paid based on the husband’s NI contributions (known as a Category BL pension) from his 65th birthday.”
The HMRC is proactively using NI records to identify individuals who may have qualified for HRP between 1978 and 2010 but lack it in their NI history. Since May 2000, including an NI number on claims has been obligatory, ensuring no issues for those who claimed after this point.
The DWP has verified that claims can be made on behalf of deceased individuals by their personal representatives. For more information on eligibility and how to claim, individuals are advised to visit the official HRP webpage on GOV.UK here.
