Hundreds of thousands of parents are missing out on a retirement top up worth £5,000 on average as the Department for Work and Pensions (DWP) admits it is struggling to reunite most with the money they are owed.
An estimated 194,000 have been affected by the issue, which has seen their state pension being underpaid – or could in the future – due to a record-keeping issue which was no mistake of their own.
The error relates to Home Responsibilities Protection (HRP), which was available between 1978 and 2010 for people in receipt of Child Benefit or with caring responsibilities.
The scheme reduced the number of qualifying years a claimant needed for a basic state pension in retirement, meaning the amount of years spent in-work and paying national insurance. This was to account for their home-related responsibilities which made them less able to be in employment.
Protection through HRP was meant to be applied automatically to those who claimed Child Benefit, with most claimants being mothers. However, the DWP says it noticed in 2021 that this had not happened in hundreds of thousands of cases, leading to underpayments worth £5,000 on average.
But in its latest annual report, the department reduced the funds set aside for the repayments from £1.2bn to just £29.8 million – a deduction of over £1bn – conceding that it will not be able to rectify the issue in the near future.
The report explains: “Correcting HRP is inherently challenging.
“The number of people applying to correct their missing HRP has been low. Substantial numbers of people have not responded to government calls for them to apply to add missing HRP and the exercise has resulted in much lower activity levels.”
Since autumn 2023, HMRC has issued over 370,000 letters to people who were potentially affected. However, during 2024/25, only 12,379 state pension underpayments were compensated, totalling around £104 million. In the year before this, it was just 419.
In response to the low take-up, the DWP has decided to change the compensation scheme from a short-term repayment drive to an ongoing programme. This means those who are affected should face no time limit in claiming what they are owed, while the department saves considerable sums in the short-term.
Anyone affected can retrospectively apply for HRP online or by post. For those who require more information, HMRC’s national insurance helpline can be reached on 0300 200 3500.
Former pensions minister Sir Steve Webb said: “The DWP’s latest report is a hammer blow to over 100,000 mothers who are receiving reduced state pensions because of errors on their National Insurance record.
“The Government’s letter-writing campaign has been a dismal failure, and this was entirely predictable given its reliance on a complicated online claims process,” the LCP partner told The Telegraph.
“Although there will still be some ongoing publicity, the figures in the annual report are an admission that the Government itself does not expect these efforts to have much impact.”
A government spokesperson said: “We are determined to help people who have been left out of pocket as a result of historical errors which are no fault of their own.
“That’s why we wrote directly to over 370,000 of those who were potentially affected and launched an online tool to help people check if they needed to claim.
“We carried out an extensive campaign to raise awareness of the issue and will continue regular communications to get people to check their National Insurance record.”
