DWP massive irretrievable data loss complicates mistake over shortchanged elderly mums

The Department for Work and Pensions (DWP) has come clean in its estimates that 210,000 retirees are owed £1billion due to a deleted data error.

The Government has announced plans for a large-scale write-out to parents who made a claim for Child Benefit before May 2000, as it attempts to define who it owes and how much.

Widespread underpayment has occurred because it was not compulsory to include National Insurance numbers on child benefit forms until 2000, meaning that parents’ entitlement to state pension was missed off their records.

Due to data protection laws, the Government must delete Child Benefit information after five years and are therefore now in the dark as to which women are affected.

If an unemployed individual had been claiming Child Benefit for 15 years, they could be entitled to an additional 15 years of National Insurance (NI) contributions.

As such, these 15 years of lost NI credit could be worth £4,543 in additional state pension per year, or £68,145 over 15 years (not factoring in inflation).

There is concern that around one in four underpaid individuals may have passed away before receiving the money they were entitled to.

Sir Steve Webb, partner at LCP and former Minister for Pensions, said: “The scale of these errors is huge. It is shocking that so many women have been underpaid so much money.

“This makes it essential that things are put right as a matter of urgency.”

He added: “It is good news that the Government is finally taking action to deal with yet more errors in people’s state pension records.

“Missing out on protection for time at home with children could make a huge difference to a mother’s pension entitlement, and lump sum payments of arrears could run into many thousands of pounds for those who are affected.

“I hope that this correction process will be completed as quickly as possible, as far too many people have been underpaid for far too long”.

HMRC have confirmed that they will be writing to all those who have no HRP on their record, as well as those who have gaps in their NI record between 1978 and 2010.

Alice Guy, head of pensions and savings at interactive investor, said: “It’s a tragedy that many women are living in unnecessary poverty due to this latest problem with the state pension.

“Someone caring for their kids as a stay-at-home Mum for 16 years could receive a depressing £4,500 less state pension each year, by missing out on crucial National Insurance credits due to this mistake.

“These are life-changing amounts and will make a huge impact on someone’s wellbeing in retirement.

“As a society we’ve decided to support women who take time out to care for their family by counting these years towards their state pension.

“It’s therefore it’s very sad that these women have been let down by the system and are now more likely to be facing poverty in old age.

“It’s vitally important that the government work hard to contact everyone affected as soon as possible to sort out this mistake.

“Sadly, many women affected could have died in poverty due to this mistake, with a much lower income than they were entitled to.”