HMRC has updated pensioners (Image: Getty)
HMRC has said Brits can still make contributions towards their state pension after some received incorrect forecasts, suggesting that they were set to receive more than they would get in actuality. It had been reported that some may be inflated due to an error, which meant that they did not show deductions where people were contracted out before 2016. Parliamentary Under-Secretary of State for Pensions, Torsten Bell MP, was asked during a committee meeting in March to explain what happened, outline how many people are affected and tell colleagues from the House of Commons what is being done to fix the problem.
He explained that the issue is “to do with customers who were contracted out and therefore would have been receiving the kind of equivalent of their earnings-related part of their state pension through their private pension system”. The minister added that the system that was providing state pension forecasts “did not take into account that contracting out had taken place in all cases”.
He conceded that he could not say “exactly how many people have been affected, because that will depend on how many people used the forecast model”. Mr Bell added that his team is “looking at that”, and “we are talking about largely people contracting between 2016 and about 2021”.
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Minister Torsten Bell has updated MPs (Image: Getty)
As regards fixing it, he said, this will be done in two ways. “First, the previous government stopped providing forecasts and encouraged people to ring instead, when they were worried that people might be affected by this some time ago, and then secondly, we have now put in place permanent fixes that mean that people are getting forecasts that take into account their contracting-out status,” the minister detailed.
Mr Bell added: “One other thing, actually, which is a bit of public messaging, is that if anybody thinks they are affected, they can always contact the HMRC, and they will take that into account in enabling them to buy any years missing in their state pension.”
A government spokesperson told the Express: “We can reassure that affected customers have not missed out, as they can still make voluntary contributions towards their State Pension for years they were contracted out.”
Some customers could have received incorrect state pension forecasts through the online tool because their contracted-out deductions were not reflected, officials say.
They reiterated Mr Bell’s statement to the committee, in that it is currently not clear how many people with contracted out pension equivalent (COPE) accessed a forecast online in this period and we’re therefore not in a position to provide any estimates at this stage.
HMRC is currently working to establish this.
Although their national insurance records were correct, if a customer’s record had received clerical intervention – i.e. HMRC had updated their record manually with new information – the forecaster did not recognise the contracted-out deduction.
The government says this issue only affected the forecast and did not affect the calculation of their state pension.
Officials say the forecast tool has been fixed, and they are working out the best ways to provide further support for affected customers.
Where customers do come forward and HMRC can verify that they were affected by the incorrect forecast and may have a state pension shortfall as a result, it will allow those customers to pay voluntary national insurance contributions for any years that they would have been able to access at the point that they accessed the incorrect forecast, which could be as far back as 2006.
This will allow customers to fill gaps in their records and boost their state pension entitlement, the government says.
Brits can pay for missing years at the rate that would have been charged had they paid for them at the point they accessed the incorrect forecast.
HMRC suggests that, where a customer was contracted out and has not yet retired, they should obtain an updated forecast through the Check Your State Pension service.