State pension warning: 'Huge errors' from HMRC result in National Insurance record gaps as Britons underpaid

Britons are being urged to check their state pension record to ensure they have received the correct amount

A historic state pension "error" from HM Revenue and Customs (HMRC) has resulted in thousands of Britons being underpaid their retirement benefits, experts warn.

An administrative blunder has left as many as 800,000 self-employed individuals with gaps in their National Insurance records, potentially costing them thousands of pounds in lost state pension income.

The error affects people who began working for themselves between 2015 and 2024 and registered for Self-Assessment but did not separately submit the specific CWF1 form to notify the tax authority of their self-employed status.

Without that notification, many were not credited with the correct Class 2 National Insurance contributions needed to build up their state pension entitlement.

HMRC estimates that roughly 160,000 of those affected have either already reached state pension age or will do so within the next two years.

The Martin Lewis-founded Money Saving Expert website highlighted the scale of the problem, warning that the complexity of the pension system leaves room for significant administrative failures.

"The whole state pension system is incredibly complex, which means even those in charge of it can make huge errors, miss payments and more," the site stated.

"Some mistakes are automatically corrected; with others, it's don't ask, don't get. So you need to know to ask. This is big money, we've had some tell us of £50,000+ successes."

Those who failed to separately declare their self-employed status via the CWF1 form may have missed out on pension-boosting contributions.

"Most people were given the right amount, but a significant number weren't," Money Saving Expert noted.

To qualify for the full new state pension, currently valued at £241.30 per week, self-employed workers generally need a minimum of 35 qualifying years of National Insurance contributions, though individual circumstances can mean some require more.

These qualifying years are accumulated through Class 2 National Insurance contributions, with the sums owed varying according to annual earnings.

Self-employed individuals earning £7,105 or above in yearly profits receive Class 2 credits automatically, safeguarding their pension record. Those earning below that threshold have the option of paying voluntary Class 2 contributions to fill potential gaps.

In the current 2026/27 tax year, voluntary payments are set at £3.65 weekly, amounting to roughly £189.80 for a complete year. Higher earners may additionally face Class 4 National Insurance charges, though these do not contribute towards state pension entitlement.

Prior to April 6, 2024, self-employed workers whose profits exceeded a specific threshold were obligated to pay mandatory Class 2 National Insurance contributions. During the 2023/24 tax year, that threshold stood at £12,570.

From the 2024/25 tax year onwards, this compulsory requirement was abolished. The State Pension becomes payable once individuals reach the official retirement age, presently set at 66 but due to rise to 67, with further increases planned beyond that.

Receiving the full amount hinges on having accumulated approximately 35 years of qualifying contributions. For those who reached state pension age after April 5, 2016, the full weekly payment stands at £241.30.

Pensioners who qualified under the older system receive £184.90 per week. HMRC has confirmed it will reach out directly to anyone whose records have been affected, meaning there is no need for individuals to take immediate action themselves.

"You could be one of 800,000 with incorrect gaps in your National Insurance record and if that means you're not on track for the full state pension, you're at risk of being underpaid £1,000s," the website warned.