In the coming months, thousands of women are to get alerts from HM Revenue and Customs about National Insurance record gaps due to unaccounted Home Responsibilities Protection periods that could affect their pension entitlements. According to new findings, up to 210,000 women, mainly in their 60s and 70s, stand to receive back payments and increased State Pension due to past errors.
However, a word of caution comes from a former Department for Work and Pensions (DWP) staffer: individuals already on Pension Credit should think twice before applying for Home Responsibilities Protection online as it may negatively impact their financial position.
With four decades of welfare benefits expertise, the ex-DWP insider said: “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.”
The DWP‘s recent brief disclosed around £1.5 billion State Pension underpayments, but the pension pro added that back payments size depends upon the number of transferred National Insurance contributions from partners.
Married females and civil partnership members are among those whose finances may see significant changes depending on actions taken following these alerts.
The situation predominantly impacts married women and those in civil partnerships, according to the Daily Record.
She explained: “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) refers to individuals who are married or in a civil partnership and reached State Pension age before April 6, 2016. They should be entitled to a Category BL uplift based on their partner’s National Insurance contributions, potentially increasing their State Pension by up to 60%.
For example, if a woman claims her State Pension at age 60 and is only entitled to 30 per cent Basic State Pension, based on her own contributions. Prior to April 1978 when HRP was introduced, there was no protection for women who stayed home to raise their children, which is why some did not have many qualifying years and were only entitled to a lower percentage of the Basic State Pension.
The former employee further added: “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.
“Some women did not even achieve these 9 years so ended up with a State Pension based on the Graduated Retirement pension scheme only (this Graduated scheme existed between 1961 and 1975), which could amount to just a few pounds or even pence a week.
“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 pointed out that if the NI record is corrected with previously unaccounted for HRP years and this still doesn’t bring her Basic State Pension above the 60% threshold, then she’s entitled to arrears of HRP from her 60th birthday until the date her husband turned 65. However, if the corrected HRP takes the Basic State Pension over the 60% rate, then arrears are owed from her 60th birthday, after considering any 60% Cat BL Basic State Pension already received before additional arrears are paid.
Divorced or widowed women
For divorced or widowed women, the former DWP staffer explained: “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.”
New State Pension
Regarding the New State Pension for women who reached State Pension age after April 2016 and whose pension is based solely on their own NI contributions, the 60% Cat BL uplift does not apply. Nevertheless, they are still eligible for all arrears resulting from any missing HRP years.
However, it’s important to note that any increase in weekly State Pension amounts for those receiving Pension Credit might lead to the termination of this credit and other related benefits.
A benefits expert explained: “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.”
HMRC is currently scouring National Insurance records to identify individuals who may have qualified for Home Responsibilities Protection (HRP) between 1978 and 2010 but lack any HRP in their NI history.
Since May 2000, it has been mandatory to provide a National Insurance number when making claims, so those who claimed after this date should not be affected.
The DWP has stated that if a customer has died, personal representatives can make a claim. For more information on eligibility and the claiming process, visit the official HRP page on GOV.UK here.
