**Thousands Could Receive Payouts of Over £7,000 After Government Pension Error**
HM Revenue and Customs (HMRC) has begun notifying hundreds of thousands of individuals who could be entitled to significant compensation, following the discovery of a long-standing mistake affecting state pension entitlements. Around 370,000 people are being contacted after it emerged that an error in National Insurance records has left many, predominantly women, potentially short-changed by thousands of pounds.
The issue stems from a failure to properly record Home Responsibilities Protection (HRP), a benefit that was designed to help those with caring duties—primarily stay-at-home mothers—between 1978 and 2000. HRP was supposed to safeguard an individual’s future state pension by reducing the number of qualifying National Insurance years needed, provided they were claiming Child Benefit or Income Support while caring for children under 16.
Tax specialists believe the error has affected many women who stayed out of the workforce to raise families during the 1980s and 1990s, at a time when HRP was meant to ensure they would not be penalised in retirement. In 2010, HRP was replaced with National Insurance credits, but the historical records of some women were never correctly updated during the transition, creating gaps in their National Insurance history.
As a result, many of those affected have been receiving less than their rightful entitlement in state pension payments. In some instances, people have been underpaid for years without realising. According to figures reported by Birmingham Live, there have already been over 5,300 cases of underpayment identified between January and September 2024 alone, with compensation totalling more than £42 million. The average sum due to each affected individual is approximately £7,859.
Alarmingly, HMRC estimates that some 43,000 of the pensioners affected have sadly died since the period in question. Despite this, their families are still eligible to receive the money owed, and the department has pledged to contact next of kin where necessary. HMRC has committed to prioritising those who have already reached pensionable age to ensure they receive any back-payments without further delay.
To qualify for a review and potential compensation, claimants must have received Child Benefit in their own name rather than through a partner or spouse. Furthermore, their child must have been under the age of 16 for the entirety of the relevant tax year, and they must not have paid into the married woman’s “reduced stamp” National Insurance scheme, which provided limited protection.
This revelation highlights ongoing concerns about the accuracy and completeness of government records related to state benefits, particularly for women who spent years with family and caring responsibilities outside the paid workforce. The oversight, though now acknowledged, has left many facing uncertainty about their financial security at a vulnerable stage in life.
HMRC has urged anyone who suspects they may be affected but has not yet received a letter to check their National Insurance record and consult the government’s official advice. They emphasise that the process of contacting all those impacted will take time given the scale of the error and the need to verify each individual case thoroughly.
This latest incident adds to growing public debate about the complexities of the UK’s state benefits system and the importance of regularly checking official records to ensure entitlements are accurate. Individuals concerned about their state pension or eligibility for back-payments can find more information on the government’s website or seek advice through official helplines.
HMRC has stated it is committed to correcting historical errors transparently and as swiftly as possible. The department advises patience as it works its way through the affected cases but stresses that addressing this past administrative mistake is now a top priority. As this process unfolds, thousands of families may find themselves entitled to unexpected but much-needed financial redress.