Where’s my state pension?
To build up state pension entitlement you need to accrue national insurance (NI) qualifying years. This can be achieved each year either through NI contributions paid based on your earned income or by making voluntary NI payments or through deemed NI credits, such as claiming child benefit (CB).
In broad terms a man born before 6th April 1951 and a woman born before 6th April 1953 would need 44 and 39 qualifying years respectively, of ‘deemed’ or actual NI contributions to obtain the full basic state pension (SP). Those born after those dates, as a basic rule, would need a minimum of 10 years and a maximum of 35 years.
For those of you who claimed child benefit (CB) up to May 2000, you may want to check if either:
- a) The SP you have been receiving has not been understated or
- b) If you are approaching state pensionable age that, where applicable, the years you claimed CB, have been counted as relevant years for SP purposes.
Prior to May 2000 there was no requirement to provide your NI number when applying for CB.
This is where the problem surrounding the SP has arisen.
In many thousands of cases, due to the lack of an NI number, the system failed to credit those CB years as qualifying SP ones. For each ‘missing’ year the cost in lost pension could be as high as £300 on an annual basis. To make matters worse, for data protection purposes, information relating to CB claims is only kept for 5 years.
When in July this year, HMRC and the Department of Work & Pensions jointly made a statement on this matter, they admitted that it was not possible to exactly quantify the number of people who could be affected.
The intention is that HMRC will carry out a phased review of the NI records to date to try to gauge who might be missing out and, where that is the case, they will ask that person to make a claim. If that is successful either the pension arrears will be paid and where applicable will be taxed or if that person has not reached pensionable age their NI records will be updated. The arrears of SP should be taxed in the year it was due not the year it was received.
HMRC and DWP accept that the phased review will take some time to run its course. Sadly some people who would have been entitled to a larger SP have now passed away but their family may be able to claim any arrears due.
If somebody feels that they may possibly be affected by this and want to speed up the process, they could consider filling in form CF411 which can either be completed online or in paper format.
If you are concerned about your state pension position please do not hesitate to contact us and we would be happy to carry out a review.