Problems with the state pension system could affect thousands of women

Monday 12 May 2008

Flaws in home responsibilities protection (HRP) could mean that thousands of women pensioners are missing out on money to which they are entitled. Why has this occurred and can those affected do anything to remedy the situation?

Why has the problem occurred?

Problems with an automated HM Revenue and Customs (HMRC) pension system could mean that thousands of women in the UK are missing out on a full state pension.

The problem concerns the HRP system that reduces the number of qualifying years, from 39 to a minimum of 20 years, required to receive a full state pension for women who took time off work to bring up children. Registered foster carers (since April 2003) and some registered carers for a sick or disabled person also qualify for HRP. This applies to women born before 6 April 1950. For those born after that date a new system applies.

Although HRP should be given automatically to a woman who has received child benefit at any time after 5 April 1978, this has not been the case for everyone. Thousands of UK women who were unaware that they qualified for HRP are not receiving full state pensions because of HMRC's system failing to automatically adjust their qualifying pension years.

What can those affected do to remedy the situation?

The pension reform minister, Mike O'Brien, has signalled a review of the system. However, it may be difficult for those who believe they are affected to claim back their qualifying years because two Government departments, that of HMRC and the Pension Service, are involved and will need to coordinate their activities to process any repayments.

If you are over 60 or within four months of retirement then you should call the Pension Service on 0845 6060 265, or alternatively call 0845 3000 168, to request a form BR1. The form is also available from http://www.thepensionservice.gov.uk/.

The form asks for the National Insurance number and asks about various benefits that the claimant may have received. On receiving the form, the Pension Service will check with HMRC to establish whether HRP is available or not.

Mike Warburton, Senior Tax Partner at Grant Thornton says: "The form is a 16 page document which may be daunting for some people, but it is relatively easy to read. However, nowhere on the form is there any reference to home responsibilities protection, or anything specifically which might alert someone to the fact that this might be relevant to their state pension calculation. For this reason you should fill out the form and then query it with the Pension Service."

Warburton concludes: "With the problem going back as far as 1978 there may be thousands of women currently struggling on reduced pensions who should actually be receiving greater support. I am delighted that Mike O'Brien is taking the matter seriously and is doing what he can to make sure these women receive their proper entitlement. This breakthrough has been achieved in no small part by the perseverance of Steve Webb, of the Liberal Democrats, who has pressed the Government over the last 12 months after I brought the matter to his attention".

If you think you may be affected by any of the above please click here to contact us for further information.