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Glitch leaves people scratching their heads
Thousands of people reaching pension age may find there is an unexpected hole in their National Insurance record. As a result they may get a lower state pension and less additional earnings related pension than they are due, writes Paul Lewis
The problem has been caused by the computers at HM Revenue & Customs which should record the National Insurance contributions deducted from the pay of 30 million people at work. But for a large number of employees – perhaps as many as 700,000 – the computer could not cope with the records sent in 2004/05 and the contributions have simply not been recorded on their personal National Insurance account.
As a result when their state pension is worked out they have a year’s gap. For some people that may not matter – you can have five missing years and still get a full pension. But for those who already have a gap, perhaps due to child care or staying in education after 18, it could mean they get less state pension than they should.
The glitch can also affect claims for Jobseekers' Allowance, incapacity benefit, and bereavement benefits. It has meant that people paying back student loans are recorded as having made no repayments in 2004/05.
It makes the official state pension forecast inaccurate in many cases. And hundreds of thousands of people under pension age have been wrongly told they should pay £371 in ‘missing’ contributions for 2004/05 to make sure their state pension is correct.
The problem was caused by the Revenue itself. From 2004/05 it insisted that all employers with more than 250 staff should file their tax and pay details electronically, on tape or disc or online. Thousands of large employers with millions of employees did so. But the tens of millions of records overwhelmed the Revenue computers. As a result hundreds of thousands of people are recorded as having paid no contributions when they in fact paid in full through their pay packet.
The good news is that the glitch is known about and once the error is pointed out it should – eventually – be corrected and your pension worked out correctly. The bad news is you have to do the bullying to make sure that work is done.
Eventually, and no doubt at our expense, this problem should be sorted out and the records restored to how they should be. Meanwhile we all have to be vigilant that it doesn’t leave us poorer.
This article was created: 20 December 2006.
This article was last edited: 3 January 2007.
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