In a statement today (December 5), Webb, partner at LCP and former pensions minister, has asked the government to end its “radio silence” over mistakes in the home responsibilities protection (HRP) system.
These errors have left an unknown number of individuals with less than they are entitled to from their state pension.
HRP was introduced in 1978 to protect parents (mainly mothers) who spent time at home with children and might otherwise have missed out on state pension rights.
In a report released in July this year, the Department for Work and Pensions initially outlined that the error had taken place and said it was working with HMRC to assess the scale of the problem.
So far we have had ‘radio silence’ from the governmentSteve Webb, LCPHowever, since then, neither department has updated the public on the scale of the problem or the plans to check cases and correct the errors.
Webb said: “There is no doubt in my mind that many thousands of mothers have been underpaid state pensions, including some who are now no longer with us.”
He added that the errors arose from a failure to correctly reflect the protection which is built into the system for time spent bringing up children.
“Yet again, a state pension error has been unearthed which disproportionately affects women,” he said.
“Whilst it is satisfying to be able to help individuals get their pension records corrected, what is really needed is concerted government action to fix this problem.”
What is needed is more communication from governmental bodies, Webb said.
“So far we have had ‘radio silence’ from the government," he said.
“DWP [has] clearly known for many months that there is a problem and it is now time for them to tell us how many people are affected and, more importantly, how they plan to put things right.”
A government spokesperson said: “We are investigating an issue with the historical recording of HRP, with work under way to identify those affected.
"We are already taking swift action to restore missing periods of HRP for people identified through this work and expect to be able to provide further information shortly.”
HRP error
The issue identified by the DWP was periods of inaccurate recording of HRP on national insurance records.
For people reaching the state pension age before April 6 2010, HRP reduced the number of qualifying years needed for a basic state pension where someone stayed at home to care for children for whom they received child benefits or a sick or disabled person.
For those reaching the state pensions age since then, previously recorded periods of HRP were converted into national insurance credits.
However, errors occurred where these periods of HRP were not accurately recorded on some people’s national insurance records.
This would have impacted the amount given to these individuals in their state pension.
At the time, the DWP said it was working with HMRC to understand more about the scale and causes of the errors, as well as the options available to correct these.
“The potential numbers of people affected and estimates of cost are unlikely to be available until autumn 2022 at the earliest,” DWP said.
The DWP has uncovered a number of pension errors in the past year, which in July it said would cost around £1.35bn to fix.
A report from the National Audit Office published in September blamed years of human errors within the DWP, calling the billion-pound underpayment “inevitable” given DWP’s high degree of manual review and complex rules.
These errors could take five years to fix, the DWP said earlier this month.
State pension age
Meanwhile, Steven Cameron, pensions director at Aegon, has said the government should offer individuals more choice over when they can start claiming their state pension.
His comments came after speculation that the government may bring forward the rise in the state pension age to 68.
The state pension age is due to increase to 67 in 2028, and there are plans to increase it further to 68 by 2039.
A review into the state pension age, which was announced last year (December 2021), will look at whether the rules around pensionable age are appropriate, based on the latest life expectancy data and other evidence.
Webb said the government may move the increase to 68 earlier, to the mid-2030s, saving a significant amount of money.
“These increases will be of major concern to those who simply feel unable to keep working till late into their 60s,” he said.
“Rather than an ever-increasing single age, we’re calling for the government to explore offering individuals more choice over when they can start claiming.”
Webb added that an ever-rising fixed state pension age could become “increasingly divisive” and out of sync with today’s “flexible” private pensions world.
He suggested more flexibility for people to start receiving their pension from a younger age, and said the government should give people the choice to draw it up to three years earlier, but at a reduced amount.
“A more flexible approach to state pension age would not only meet the more varied ways people now retire but would also go some way to alleviate the concerns of an ever increasing ‘standard’ state pension age,” he said.
A DWP spokesperson said no decision has been taken on changes to the state pension age.
“The government is required by law to regularly review the state pension age and the second state pension age review is currently considering, based on a wide range of evidence including latest life expectancy data and two independent reports, whether the rules around state pension age remain appropriate.
“The review will be published in early 2023.”
sally.hickey@ft.com
