Urgent warning for millions on Universal Credit who could miss out on cash after huge error
MILLIONS of people on Universal Credit are at risk of missing out on cash after a huge error.
The Department for Work and Pensions (DWP) has identified that the National Insurance (NI) records of 10million people on the benefit have not been updated.
A further 137,000 who’ve reached the State Pension age may also be getting less than they are entitled to because NI credits were never passed on to HMRC.
You can get the full amount of State Pension if you have made 35 years’ worth of NI contributions or credits.
But Brits have to have made at least 10 years to get at least something.
The full state pension is currently worth £203.85 a week.
But if you don’t have 35 year’s worth of NI contributions you’ll get a reduced rate.
This would mean that those previously on Universal Credit who have been affected by the DWP error and now claiming State Pension are getting less than they should.
Others yet to reach retirement age could find their foretasted pension payments are not as much as they should be.
It’s the latest of a string of DWP errors which have resulted in state pension underpayments.
Steve Webb, former pensions minister and consultant at LCP said: “These new official figures show the vast number of people who may currently have errors on their NI records.
“Some people have already retired without the problem being fixed, whilst others may have forked out by paying voluntary NI contributions for the years they think they’ve missed.
“The DWP is acting very cloak and dagger about it and needs to commit to refunding any wasted NI contributions.
“They also need to do a thorough check to make sure anyone who has already retired is on the correct pension and has what they’re owed backdated.”
The latest errors were uncovered in a National Audit Office report digging in to the DWP’s accounts.
It revealed that the government department has been manually updating the records of affected individuals as they approach the State Pension age since February this year to try and correct the errors.
Guy Opperman, minister of state at the DWP said: “The Department has been working with HMRC to resolve this issue.
“We expect NI records will be fully updated by HMRC over the course of 2023/24, any State Pension entitlement will be reassessed, and any underpayment addressed accordingly.”
What’s happened?
Millions of households on Universal Credit automatically qualify for Class 3 NI credit – irrespective of whether they work or not.
It’s the job of the DWP to notify HMRC of these free State Pension qualifying years each year.
However, the DWP has identified that the NI records for millions on Universal Credit have not been updated properly.
A small proportion of ex-claimants may have also been underpaid their State Pension.
As a result of this millions of claimants looking at their future pensions forecast are at risk of being underpaid.
How many are affected?
The DWP reports that it failed to update the NI records for potentially 10million people on Universal Credit.
Of those missing the Universal Credit NI credits, 137,000 have already reached the State Pension age.
This means that thousands are already being directly underpaid because of the error.
Do those affected need to take action?
Those who think that their pension forecast is inaccurate don’t need to report the issue to the DWP.
The DWP has been manually updating the records as people approach State Pension age.
It has also said that it will ensure that those who’ve made unnecessarily voluntary contributions will get a refund.
Who qualifies for NI credits?
It is important to check if the gaps in your contributions can be plugged with free NICs credits.
Thousands are thought to be missing out on these NI Credits, leaving them worse off in retirement.
For example, those on Universal Credit automatically qualify for Class 3 NI credits.
Class 3 NI credits count towards to your State Pension and can help automatically fill gaps in your contributions when you’re out of work.
You can check the full list of who’s eligible for claiming credits on the government website.
It explains the circumstances where you’ll need to claim and when you’ll get it automatically.