Shocking state pension failures revealed by a This is Money inquiry were challenged in Parliament by Liberal Democrat MP Wendy Chamberlain
The government has admitted that an automated system meant to update the state pension records of millions of Universal Credit applicants went bankrupt in 2017, and it will take another year to correct all errors.
An exclusive This is Money investigation has revealed that many National Insurance records are riddled with holes and that the government has dodged our attempts to uncover the scandal.
Lost NI credits can mean retirees face state pension shortfalls in retirement, unless they are fixed in time.
The Government was forced to reveal its mistakes after Liberal Democrat Works and Pensions MP Wendy Chamberlain demanded answers from Parliament.
A letter to Chamberlain from Employment Minister Guy Opperman confirms our report that people on Universal Credit only have state pension records manually corrected as they reach age of retirement.
But as we’ve discovered, they can slip through the net and be underpaid as a result, or waste money buying add-ons they don’t need.
Opperman’s letter reveals that an automated process for adding Universal Credit applicants’ data to their state pension records was suspended in 2017/18, and the fixes won’t be complete until next April.
“The vast majority of those affected are many years away from reaching state pension age and will not be affected by this issue when they apply for a state pension,” he writes.
“For those who need to reclaim their state pension, HMRC and DWP have put in place a manual process to correct NI records and state pensions.”
Mr Opperman – after a five-year term, the UK’s longest-serving pensions minister before his promotion last year – adds: “For those who are already applying for their state pension, who are affected by this, their state pension will be reassessed and any underpayments issued accordingly through normal processes.
DWP made no effort to tell the public what was going on behind the scenes, and in particular to ensure that people did not risk wasting their money paying voluntary National Insurance contributions.
Steve Webb, former Minister of Pensions
Nearly 5.9 million people were on Universal Credit at the start of this year, and many more could have been affected once those no longer claiming are also taken into account.
However, the DWP and HMRC apparently never officially revealed any serious problems with these people’s state pension records, either to the general public or to MPs.
And the Gov.uk website still misleads Universal Credit applicants into believing that their NI credits are updated automatically.
This is Money was the first to reveal last November that a mysterious “glitch” in state pension records is leaving savers struggling to fix potentially costly holes in their income.
We have since reported many more cases and revealed how people were stranded by staff from three separate government departments – Universal Credit and the Future Pensions Center within the DWP, as well as HMRC – all of whom refused to help.
Readers have handed us startling evidence, in individual letters and an email from junior DWP staff, that has revealed this to be a long-standing and well-known issue internally that it does not There was no working system to automatically update Universal Credit applicants’ NI credits.
Liberal Democrat MP Wendy Chamberlain told us: ‘Pensioners deserve better than to be collateral damage from failing government systems.
“Measures to correct this are welcome, as is the government belatedly exposing its mistakes.
“But it is clear from the number of retirees who have come forward during this investigation that the manual process is not working. The government must act now to ensure that no more pensioners are left without, especially during this cost of living crisis.
Former Pensions Minister Steve Webb said of Opperman’s admission: ‘This letter reveals that the mess over the National Insurance records of people on Universal Credit has been going on for years and that it will take at least another year to be settled.”
“Yet DWP made no effort to tell the public what was going on behind the scenes, and in particular to make sure that people didn’t risk wasting their money paying for voluntary NICs for years that should be covered by loans.
“DWP admits in its letter that there are retirees who are underpaid, showing that current manual processes are not working reliably.”
Webb, now an LCP partner and pensions columnist for This is Money, adds: “There needs to be a culture change at DWP where they are transparent when things go wrong rather than trying to fool people with excuses. “
In response to the first case we raised, the government sidestepped our questions about the cause of the missing NI credits and how many people were affected, and said: “To your experience, there is no indication of a larger problem”.
We disputed this statement when we sent other cases and repeated our questions. But the government again tried to conceal the true situation of Universal Credit claimants and said: ‘The vast majority of National Insurance credits linked to benefit claims are automatically added to a person’s account.’
The DWP also pushed back against a shadow labor minister who tried in early December to shed light on the failings.
MP Gerald Jones, Shadow Minister for Wales, asked in a written question ‘when the technical issues outstanding since 2018 in allocating National Insurance credits to Universal Credit applications will be resolved’.
Opperman responded at the time, “The referenced technical issues have been identified and DWP has taken the necessary steps to correct them.”
The DWP and HMRC have been approached for comment, but have not responded at the time of publication.
When we published our last article, we confronted them with 10 cases of missing credits and asked them why they had tried to cover up serious failures in automatically updating the state pension records of people claiming the credit. universal.
A DWP spokesperson said: ‘All cases raised have now been resolved and we are sorry for the inconvenience.
“We are working with HMRC on an improved process for adding historic and future Universal Credit National Insurance credits to National Insurance records.”
The government told us that HMRC advises customers to wait for NI credits linked to Universal Credit to appear on their file before making the voluntary payments necessary to make it an eligible year, and that if payments are made unnecessarily, they can be refunded.
However, people who are aware that they are missing NI credits have found it almost impossible to update them, and in the meantime many people may not know because the government website tells them that the credits for their state pension are updated automatically.
The government has given the following additional guidance to CU applicants.
– The presence of certain National Insurance credits for a given year does not necessarily mean that a client will meet the threshold for these to be considered a “qualifying year” for state pension purposes, once this is recorded by HMRC.
– Customers with questions, including those over retirement age, can contact the Universal Credit Helpline or speak to their job coach or case manager.
> Savers are FINALLY winning the battle for NI credits: we highlight 10 cases here
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