Steve Webb gave his usual barn-storming performance at Pension PlayPen’s coffee morning yesterday. You can watch it here.
He has uncovered another issue with the State Pension , this time concerning mothers who have not been properly credited with qualifying years towards the state pension. For a second time , LCP has put up a website to help , you can access it from this link
Here’s the issue
There have in the past been concerns that some people – mostly mothers – were not getting this protection because of problems getting data from the Child Benefit computer onto the National Insurance computer. In response, DWP ran a correction exercise over a decade ago which identified around 36,000 parents who had wrongly missed out, and it paid over £85m in state pension arrears, as well as increasing weekly state pensions for those affected by an average of £10 per week.
Now DWP in its most recent annual report (see p71) has admitted that it thinks more people may be missing out.
Steve and his firm are recommending a three point action plan for all Mums in receipt of a state pension.
The steps are:
- Check if you are entitled
- If so, check if that entitlement is showing on your National Insurance record
- If it is missing, fill in the relevant form to get this fixed and your pension increased
Check if you are entitled
To help you work out if you are entitled to protection for your National Insurance record because of time at home with children, we start by explaining how the system worked. There have been two different systems – ‘Home Responsibilities Protection’ for periods from 1978/79 to 2009/10, and “NI Credits” from 2010/11 onwards.
1978/79 to 2009/10 – Home Responsibilities Protection
From 1978/79 to 2009/10, protection for parents was provided by a system known as ‘Home Responsibilities Protection’ (HRP). To qualify for a year of HRP from 1978/79 onwards you had to be:
- Receiving Child Benefit (with the payment in your name not that of a spouse or partner); AND
- Have a child under the age of 16 for the whole financial year (meaning that the year in which the child turned 16 did not count); AND
- Not be paying (or eligible to pay) the reduced ‘married woman’s stamp’;
If you can say yes to all of these questions for any year from 1978/79 to 2009/10, you should qualify for HRP for that year.
For those who reached state pension age before 6th April 2010, each year of HRP (up to a maximum of 20) meant one less year of actual contributions was needed for a full pension.
For example, consider a woman with 15 years of actual contributions (from paid work and paying NI) and 9 years of HRP. Until 2010, women needed 39 years of contributions to qualify for a full pension. Without HRP, this woman would have 15/39 of a full pension or a contribution record of 38.4%. With HRP, her target for a full pension is reduced by 9 years from 39 years to 30 years. This means her 15 years of actual contributions generate a contribution record of 50% – 15/30. This would give her a much bigger pension.
2010/11 onwards – National Insurance credits
In April 2010, a change was made to the way in which time at home with children counted towards your state pension. Instead of reducing the target number of years for a full pension, each year at home with children would now simply count in full towards your state pension, just as if you had been in paid work. (Years of HRP from before 2010 were converted into full National Insurance credits for those who had not yet reached pension age).
Two other changes were made in 2010:
- Credits for time at home with children would now only be available for children under 12;
- The number of years for a full state pension was reduced from 44 for a man or 39 for a woman to 30; this was increased to 35 years in 2016;
Apart from these changes, the same basic rules applied for NI credits from 2010/11 as for HRP before that date:
- You must be getting Child Benefit in your name AND
- The child must be under the age of 12 for the whole year AND
- You must not be paying (or eligible to pay) the reduced ‘married woman’s stamp’
If you can say yes to all of these questions then you should be entitled to NI credits for the year in question.
2. Have I missed out?
The simplest way to check if you are receiving HRP / NI credits is to look at your NI record.
- For those who reached pension age after 5th April 2010, any year of HRP/credits should be showing as a complete year on your NI record. If not, this needs to be investigated. Remember that HRP was only introduced with effect from 1978/79 onwards and does not apply if you were paying (or eligible to pay) the reduced ‘married woman’s stamp’ for that year.
- For those who reached pension age on or before 5th April 2010, HRP was recorded in a different way and you need to phone the NI helpline to check if there is HRP on your record and, if so, for which years.
3. How can I fix the problem?
In principle, you could simply wait for DWP and HMRC to conduct their review of the issue, which they say will not be complete until ‘Autumn 2022 at the earliest’. But even when they have completed their review it might take years for them to fix the problem at their end.
The good news is that if HRP / NI credits are missing from your record then you do not need to wait.