Mothers could have missed out on £1bn in state pension

Mothers may have been underpaid about £1bn in state pension owing to information missing from their national insurance (NI) records.

Since 1978, the system has included credits for parents who took time out of employment to bring up children.

Until 2010, this was known as home responsibilities protection (HRP), but it may be missing from some NI records.

People who may be affected will receive letters from the government as part of a campaign to correct the issue.

Some people affected may have died and their families will be entitled to check their eligibility and make a claim for any arrears.

The Department for Work and Pensions (DWP) and HM Revenue and Customs are working together to find people affected and correct their records so they receive the right amount of state pension.

There are high levels of uncertainty over the amount that could have been underpaid. This could range from £300m to £1.5bn, the DWP has said.

Its central estimate is that £1bn is owed, to about 210,000 people, of which 43,000 have died. That would equate to an average shortfall of about £5,000 each.

• Campaign to ensure mothers receive state pension

If someone claimed child benefit before May 2000 and did not provide their NI number on the claim, their NI record may not show the correct number of qualifying years of HRP, which could affect their state pension entitlement.

Women in their 60s and 70s are most likely to be affected, the government said.

HMRC is using NI records to identify as many people as possible who might have been entitled to HRP between 1978 and 2010 and have no HRP credits on their NI record.

It will write to people who meet these criteria from the autumn, to find out if they are eligible to claim. If they are eligible, they can apply online.

DWP will recalculate the state pension entitlement and let people know whether they are due any arrears.

Pension consultants LCP have been running a tool to allow people to check they are not missing out.

Sir Steve Webb, a former pensions minister who is now a partner at LCP, said: "The scale of these errors is huge. It is shocking that so many women have been underpaid so much money. This makes it essential that things are put right as a matter of urgency."

Alice Guy, head of pensions and savings at investment platform Interactive Investor said: "The state pension is crucially important, especially for many women who are less likely than men to have a private pension income and are more likely to be living in poverty in retirement."

A spokesman for the government said: "Most people's records will be unaffected, and we will shortly be launching a new online tool to help people check whether they need to claim. HMRC will also begin writing to those likely to be affected from the autumn.

"Our priority is ensuring everyone receives the financial support to which they are entitled, and state pension underpayment rates due to official error remain low at 0.5% of expenditure. Where errors do occur, we are committed to fixing them as quickly as possible."