State Pension panic as National Insurance blunder leaves Brits £4.5k out of pocket

Most of the people owed thousands of pounds due to errors in the State Pension system won't be reimbursed, DWP has admitted. Parents and carers who claimed child benefit between 1978 and 2010 should have been given credit on their National Insurance record from Home Responsibilities Protection. This would have boosted their State Pension.

But system errors left many parents and carers claiming child benefit before 2000 without the National Insurance credits they were entitled to. It means in some cases people are owed up to £4,500 per year extra in their State Pension.

To qualify for the new State Pension, earners need to have accrued 35 full years of National Insurance contributions. To qualify in the first place workers need to have paid NI for 10 years.

The errors mainly affect women in their sixties and seventies who were stay at home mums.

The Department for Work and Pensions (DWP) wrote to those it thought might be affected two years ago and invited them to submit a claim.

HM Revenue & Customs sent letters to 370,000 people about it before the efforts to make contact ended in April.

DWP estimated last year that it would contact 90% of those owed State Pension to correct the mistake, but it has now slashed that down to just 8%, according to The Times.

Money set aside to settle any shortfall has also been cut from £1billion to £29.8m. So far, £104m has been paid to correct the records of 12,379 pensioners, the same publication reports.

Steve Webb, a former pensions minister and now a partner at the pensions consultancy LCP, said it was totally unacceptable that the DWP had all but given up on the mothers affected.

He called for a direct mail campaign to inform those potentially affected and for the DWP to make it easier to apply this time round.

The DWP said correcting Home Responsibilities Protection claims was inherently challenging and the low numbers claiming arrears was down to some believing HMRC's letters were a scam. It said others had struggled to apply online and didn't understand how relevant the problem was.