State pension failures for Universal Credit claimants exposed
Denise Smith, who struggled to get state pension corrected: ‘I need to know they are paying me what I am entitled to’
The state pension records of people claiming Universal Credit are riddled with holes and the Government has dodged our attempts to uncover the scandal, This is Money exclusively reveals today.
Millions of people who claimed Universal Credit could have errors in their records, because the system meant to update their National Insurance credits automatically has either never worked or has been broken since 2018.
We have discovered people on Universal Credit are only having state pensions manually corrected when they are within four months of state pension age, but they can fall through the net and be underpaid as a result.
Others could have wasted money buying top-ups to boost their state pension that they don’t need.
Denise Smith, pictured right, is 67 and will be handed £664 following This is Money’s intervention, after she spent months attempting to chase up missing NI credits with the Department for Work and Pensions and HMRC.
‘It is such a shambles,’ she told us. ‘You get to retirement age and you are still fighting for things.’
Millions of people have claimed Universal Credit since 2018 – there were 4.8million as of last August. Lost NI credits can mean pensioners face shortfalls in retirement unless they notice and get them fixed.
Many could have spent money on top-ups because their records undercounted how much state pension they will receive and they were wrongly led to believe they should pay up to boost it.
This is Money was the first to reveal last November that a mystery ‘glitch’ in state pension records was leaving savers struggling to fix potentially costly holes in their income.
We flagged more cases at the end of last year, and exposed how people were being stonewalled by staff in three separate Government departments who all refused to help them.
This is Money has repeatedly pressed the DWP on whether there is a wider problem, but it has sought to dodge the issue.
Today we highlight TEN new cases, including those of readers who handed us startling evidence that the Government has failed to come clean about missing NI credits.
Letters and an email from junior DWP staff to our readers – detailed in full below – disclose:
– It is a longstanding and well known issue that there is no working system for automatically updating Universal Credit claimants’ NI credits;
– There is no time scale for getting this sorted out;
– Currently only those within four months of reaching state retirement age are getting their records manually corrected.
‘It is shocking that people have been passed backwards and forwards between DWP and HMRC with everyone blaming someone else
Steve Webb, former Pensions Minister
Yet, in response to the first case we raised, the Government evaded our questions about the cause of missing NI credits and how many people were affected, and said: ‘For your background, there is no indication of a wider issue’.
We challenged this statement when we sent further cases, and repeated our questions. But the Government again attempted to cover up the true situation for Universal Credit claimants, and said: ‘The vast majority of National Insurance credits relating to benefit claims are added to a person’s account automatically’.
The DWP also fobbed off a Shadow Labour Minister who attempted in early December to get to the bottom of the failures.
Gerald Jones MP, Shadow Minister for Wales, asked in a written question ‘when the technical issues that have been outstanding since 2018 to award National Insurance credits to Universal Credit claims will be resolved’.
A Minister of State at the DWP, Guy Opperman – after a five year stint, the UK’s longest-serving Pensions Minister before his promotion last year – replied: ‘The technical issues referenced were identified, and DWP have taken the steps to correct them.’
Meanwhile, the Gov.uk website misleads Universal Credit claimants into thinking their NI credits are being updated automatically– see below.
When we confronted the Government with 10 fresh cases, and asked why it had attempted to cover up serious failures to automatically state pension records of people claiming Universal Credit, a DWP spokesperson said: ‘All of the cases raised have now been resolved and we are sorry for any inconvenience caused.
‘We are working with HMRC on an improved process to add historic and future Universal Credit National Insurance credits to National Insurance records.’
Matt Rodda, Labour’s Shadow Pensions Minister: Ministers must own up to any mistakes and correct them as soon as possible
Former Pensions Minister and This is Money’s pensions columnist, Steve Webb, said: ‘For many people, National Insurance credits are vital to making sure that they receive a full state pension.
‘So it is shocking that a system for allocating credits automatically to people on Universal Credit seems to have been an afterthought, and isn’t even in place years after the benefit started.’
Webb, now a partner at pension consultant LCP, added: ‘It is not good enough to sort things out in the run-up to retirement as people may already have wasted money on voluntary NI contributions by this time.
‘It is also shocking that people have been passed backwards and forwards between DWP and HMRC with everyone blaming someone else. It is time DWP treated this issue with the priority it deserves.’
Matt Rodda, Labour’s Shadow Pensions Minister, said: ‘People who have worked hard and contributed all their lives deserve to be paid their state pension. Ministers must own up to any mistakes and correct them as soon as possible.
‘It is vital that the DWP runs its systems effectively and a Labour Government would take steps to improve administration of these vital services.’
Wendy Chamberlain MP, Liberal Democrat Spokesperson for Work and Pensions, said: ‘It is a new low even for this Government to be actively deceiving pensioners.
‘Not only are errors being made leaving older people without the pensions they are entitled to, but it is being covered up.
‘I am pleased that these cases have been resolved but it should never have gotten this far. The Government must come clean about this broken system and act now to make sure this doesn’t happen again.
Campaigner and former Pensions Minister Ros Altmann said: ‘I am delighted that DWP has corrected all the errors you have brought to their attention.
Wendy Chamberlain MP, Liberal Democrat Spokesperson for Work and Pensions: It is a new low even for this Government to be actively deceiving pensioners
‘However, it is still of concern that many other people either do not yet know their record is wrong, or try to call DWP and get the wrong information, or don’t manage to find out at all.
‘The sooner the systems between HMRC and DWP work properly and the automatic updates happen as promised, the better.
‘Well done for highlighting this and I still think advice to people on Universal Credit to check what is happening is probably sensible.’
>>>DWP and HMRC systems are not integrated: Read more from Lady Altmann below
Savers FINALLY win battle for NI credits
The 10 cases below are now resolved after we flagged them to the DWP and HMRC. Some will still need to buy top-ups if they want to fill gaps where their NI credits don’t make up full years (see the box below).
‘You get to retirement age and you are still fighting for things’
Denise Smith says Universal Credit claimed for 18 months from October 2021 was not added to her record, and her efforts to alert DWP and HMRC were in vain.
Fearing she was being shortchanged on her state pension payments, she called both departments and on one occasion was told by the DWP there would be a six-month wait before it could be sorted out.
Mrs Smith read a previous story about Universal Credit claimants missing out on NI credits on This is Money, and says: ‘I did not know that other people were in the same boat as me and this was a frequent problem.
‘I thought both DWP and HMRC were paid to do a specialised job and we as the public shouldn’t be continually checking their work to see if it is done correctly. Does no one audit their work.
‘It is such a shambles and most of the people I spoke to within HMRC hadn’t a clue about my NI contributions.’
Mrs Smith, a former pensions administrator who lives in Derbyshire, was worried about how she would get her tax situation addressed once her state pension was belatedly corrected.
‘Everything seems to be mounting up against me through no fault of my own,’ she says.
‘You get to retirement age and you are still fighting for things. I need to know they are paying me what I am entitled to. These people are paid to do a job of work.’ Mrs Smith has now received a £664 backpayment.
What else does the DWP say
The Government gave the following further guidance to UC claimants.
– The presence of some National Insurance credits for a given year does not necessarily mean a customer will reach the threshold for these to count as a ‘qualifying year’ for state pension purposes, once this is recorded by HMRC.
– Customers with queries, including those above state pension age, can contact the universal credit helpline, or speak to their work coach or case manager.
– Customers are advised by HMRC to wait until universal credit credits are showing on their record before making any voluntary payments needed to make that a qualifying year. If any payments are made unnecessarily, they can be refunded.
‘I have been chasing this for months and it’s a constant stream of denial’
Andrew Phillips is less than three months away from drawing his state pension but attempts to get his record updated proved fruitless.
The 65-year-old retired press photographer from East Sussex, who is unable to work due to his health, says he has been drawing Universal Credit since May 2020.
After reading an earlier story on This is Money about people struggling to get NI credits added to their record, he contacted us to say: ‘My tale is the same as the other readers, having been passed around from the various Government departments without one able to help. They all just want to pass the buck.
‘I have been chasing this for months and it’s a constant stream of denial. I will reach pension age this April so I am just trying to get everything in place. It’s triangular pass the buck.
‘I spoke to one person who said we are aware and it’s a computer problem that no one is in a position to sort out. It’s just not working.’
Mr Phillips says he received his state pension award letter this month, and the amount showed that NI credits are still missing.
This month he also received a response from HMRC, telling him that it has no record of credits awarded to him, and to contact the Universal Credit department about this because it is unable to assist.
‘I think it sums up perfectly the ridiculousness of the situation,’ he says. ‘The reply from Universal Credit on 8th December was, as I mentioned thus: “Universal Credit would not be paying your National Insurance payments I think you would need to speak to HMRC. Regards [name redacted] Hastings Service Centre”.’
Mr Phillips adds that he is concerned most people will be ‘blissfully unaware’ that the NI credits they need towards their state pension are not being updated.
‘This is a bigger problem than they are admitting’
Alan Tweddle spent months attempting to get two years’ NI credits updated before turning to his local MP, who managed to get an explanation out of the Government on his behalf.
A letter addressed to Labour MP Mary Glindon from the DWP’s complaints team in Wolverhampton reveals: ‘Currently there is no automatic process to award the Universal Credit Class 3 National Insurance contribution credits.’
It says ‘a solution is being progressed’ to ensure the award of contributions, and in the meantime the DWP was notifying HMRC when claimants relying on NI credits approached state pension age to get their records updated.
Mr Tweddle, 55, a warehouse worker from Newcastle who is on Universal Credit at present due to ill health, says he was fobbed off many times when trying to get answers himself and called the situation ‘a disgrace’.
‘I believe this is a bigger problem than they are admitting as many people do not check their National Insurance credits,’ he adds.
‘How many people don’t realise their state pension is not updated? It’s going to cause a lot of problems for people. It should be done regardless of where you are in relation to your pension. It’s supposed to be a basic function of your claim.
‘You shouldn’t have to chase them. How many people are getting a pension less than what it should be? DWP need to fix the problem. I spent hours on the phone trying to get through to them.’
‘Everyone I have spoken to just passes the buck between HMRC and Universal Credit’
Caroline Hart (not her real name) and her husband are both 65 and claimed Universal Credit jointly for around six months from September 2020, but only his state pension record was updated with the correct NI credits.
After spending hours on the phone trying to sort it out, Mrs Hart, a financial administrator from Bradford, made a formal complaint to the DWP, saying: ‘I have been passed from pillar to post as everyone I have spoken to just passes the buck between HMRC and Universal Credit.’
She received a response from a DWP disputes resolution manager, which revealed ‘an issue with update of National Insurance Credits based on Universal Credit entitlement’.
It went on: ‘A solution is currently in development which will ensure all Universal Credit claimants are credited with the appropriate credits. I don’t have a timescale for when this work will be completed. Currently claimants who are within four months of state pension age are prioritised to ensure their claims for state pension are not delayed.’
The DWP complaint handler refused to fix Mrs Hart’s NI credits because she is more than four months from drawing her state pension, without explaining why her husband’s were updated although he isn’t either – their birthdays are just a month apart.
The DWP did add an apology for the ‘difficulty’ Mrs Hart experienced in getting a response, and the ‘frustration and anxiety’ this had caused, but she says: ‘I feel aggrieved. I was contracted out so I need those six months. I have grandparent’s credits for the other six months.’
Like many other readers who have contacted This is Money, Mrs Hart expressed concern that many claimants will be unaware NI credits are missing when they look at their state pension records to date.
Lidia P’ng: The system was never designed properly. After the Post Office scandal this is another one
‘Government website says credits will be paid automatically – that is a lie’
Lidia P’ng chased the DWP and HMRC for months to find out why nearly two years when she claimed universal credit were missing from her state pension record.
The 60-year-old data management specialist from London received an email from the DWP this month, apologising for any processes or advice given which have ’caused any stress or anxiety’.
‘There is a known issue with the Class 3 Contributions not being updated onto the HMRC system, it is an issue which both DWP and HMRC are aware of and both departments are currently working to try to get this resolved,’ says the message from a customer liaison manager at DWP St Austell service centre.
‘The understanding is that once the fault has been fixed then a program is going to be run through the Universal Credit system and anybody that has had a Universal Credit claim and is entitled to the Class 3 NI credits will have their record updated.
‘Unfortunately I am unable to give you any time scales regarding this fix being applied as we have not been given any at the moment.
‘At the moment the only cases that our technical teams are looking at to update are those were the claimant is within four months of receiving their state pension, but as you are only 60 this would not be the case with yourself I am afraid.’
Mrs P’ng, who wants her record updated so she can buy state pension top-ups, says: ‘It just makes me angry. I don’t think it’s fair. On the Government website it says credits will be paid automatically. That is a lie.
‘Because of my condition I can’t work again. I want to fill the gaps now while I am able to. I should be able to top up at any time.
‘It’s diabolical and they are hiding the truth. The system was never designed properly. After the Post Office scandal this is another one.
‘I am sure there are thousands of people who are not aware that their state pension records are not complete.’
STEVE WEBB ANSWERS YOUR PENSION QUESTIONS
‘This is obviously a big worry’
Stephen Nafzger used to get his NI credits updated automatically when he was on Employment and Support Allowance, which is paid to people who cannot work because of illness or disability, from 2011 to 2018.
The 54-year-old former aircraft engineer from Dorset, says: ‘Since being moved onto Universal Credit I have not had my credits applied to my pension.
‘I have contacted numerous departments – HMRC, DWP, Universal Credit – and everyone just blames the other department and says that it will all get sorted within three months of my retirement date! 2035! But I won’t find this out until 12 years’ time which is absolutely ridiculous! This is obviously a big worry.’
‘I went through so many Government departments’
Angela Dawes (not her real name) is 64 and wants to buy state pension top-ups, but feels she cannot go ahead until her record is corrected to include NI credits covering several years when she has claimed Universal Credit.
She says: ‘My latest state pension forecast shows the NI contributions for those years are missing.
‘I have asked HMRC and they referred me to DWP and they have told me they do not know anything about NI!’
Mrs Dawes, who lives in Cheshire and formerly worked in the civil service, adds: ‘I went through so many Government departments. I was referred from one to another to another.
‘Universal Credit said they would reply in six weeks. Nine weeks later I had a note on my journal saying we don’t deal with that.’
‘I just don’t believe anything they say’
‘I tried to resolve this issue, literally spending hours and hours waiting to be connected on the phone to HMRC, DWP or Universal Credit, but I haven’t any success so far as I was passed from one department to another,’ says Carol Jones (not her real name).
The 60-year-old designer, who lives in the north of England, claimed Universal Credit during two periods of around a year in 2018-19 and 2020-21 due to unemployment.
She noticed the NI credits were missing from her state pension record and started trying to correct this last summer.
During a call to a complaints officer at the DWP in November, she was told that missing NI credits are a very well-known issue and there are system problems within the department. Until then, she had not known other people were affected.
‘They never admitted it. I thought my local Job Centre had neglected it,’ she says.
‘I just don’t believe anything they say. I have lost any faith that this huge Government organisation is effective. I would like this to be sorted. They need to admit what is going on. If they don’t correct this I don’t know when I will be eligible to retire.’
‘I want them to be more honest about it’
Army veteran Peter Scott (not his real name) has not had NI credits from claiming Universal Credit added to his state pension record since 2018.
Mr Scott, 58, was medically discharged from the army, in which he served as a corporal in the Royal Logistics Corps, and lives in Scotland.
He points out that the Government itself says the NI credits that are due if you claim universal credit will be updated automatically.
‘It doesn’t say you wait until you are 65 before they update it. I want them to be more honest about it. People are getting near state pension age with years missing.’
‘Government website says a disabled person will get NI credits, so why didn’t I?’
Helen Powell won six years’ missing NI credits after This is Money intervened in her battle with the Government over a joint ESA claim with her husband.
The Cheshire couple, who are both disabled, say that the DWP did not explain that under a joint ESA claim NI credits would only be awarded to Mr Powell, who is now 68 and did not need them. Mrs Powell, 52, subsequently moved onto Universal Credit last spring.
When their complaint over missing credits last summer got nowhere, the couple turned to This is Money for help.
Mrs Powell told us: ‘The Government website clearly states that a disabled person will get NI credits. Nowhere can I find anything that states “unless you’re a married woman and you’re not the main claimant”.’
Mr Powell received a letter from the DWP, dated the day after we raised his wife’s case with the department, admitting she should have been receiving NI credits since 2016 but her claim had been deleted from the system.
The DWP promised to correct this and and apologised for the distress and inconvenience caused to the couple.
Universal Credit claimants should check automatic NI credits are being put on their records
Campaigner and former Pensions Minister Lady Altmann gives her take on the issue.
I don’t know the details of what has gone wrong but it seems that here we have yet another example of how the lack of integration between DWP and HMRC computer systems, and how inherent flaws in outdated DWP IT systems are creating significant anxiety for ordinary members of the public.
The benefits system has so many complexities and the lack of reliability of National Insurance records can leave people without the information they need to plan their retirement.
Lady Altmann: Inherent flaws in outdated DWP IT systems are creating significant anxiety for ordinary members of the public
Some will not know their records are wrong and just accept what they are told, losing out on extra pension they may be entitled to
Others will not know they haven’t received credits and unnecessarily pay money with voluntary contributions to top up their record.
And others will see the problems but spend hours trying to get them sorted out but to no avail.
I know the DWP is dealing with millions of people and tens of millions of payments and that their IT systems are creaking under the strain.
It may well be true that the majority of people on Universal Credit are receiving their credit automatically, but the fact that you have discovered a number of errors does suggest that departmental complacency is misplaced.
These are not easy issues but at the very least I would think Universal Credit claimants should be warned to check that the intended automatic credits are actually being put on their records. To lead the public into believing the Government is automatically taking care of this, when officials know this is not happening at the moment, does seem to be unwise.
Given the DWP have no idea when the problem will be fixed – and thinking back to the problem of women not receiving the automatic uplift in their state pension since 2008 – which This is Money only recently discovered – the need for action seems urgent.
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