Is my state pension too low because the final NI year is missing?

Is my state pension too low because the DWP missed the final year of my NI? Steve Webb finds an error and wins a reader £1,600 – could it affect YOU?

I’m 79 and started receiving my state pension in 2008.

I knew I did not have quite the full 44 years required for a full pension. I receive 94 per cent of the full basic pension. I do have Guaranteed Minimum Pension and Graduated Retirement Benefit.

A couple of years ago I asked the Department for Work and Pensions how many full years I had. They wrote to me and said I had 42.

That’s about 95.4 per cent. Am I underpaid or is there more to it than my simple maths? Not so much bothered about the money more the principle of correct calculation.


State pension: Error led to £1,600 shortfall in reader's payments during years since 2008

State pension: Error led to £1,600 shortfall in reader’s payments during years since 2008

Steve Webb replies: You are quite right that something didn’t add up when you looked at your pension figures.

For a man, such as yourself, who came under the old state pension system, it was usually necessary to have 44 qualifying years of NI contributions to get a full basic pension.

If you had 42 years then you should have been awarded 42/44 of a full pension. Rounded up, this would have given you 96 per cent of the full rate.

But when you looked at your actual state pension you were being paid at only 94 per cent of the full rate.

When I contacted DWP to ask what was going on, it admitted a mistake had been made, and have now paid you over £1,600 in arrears as well as adding about £3 per week to your pension.

What happened was that you claimed your state pension in good time in February 2008, ahead of your pension age in June 2008.

Steve Webb: Find out how to ask the former Pensions Minister a question about your retirement savings in the box below

Steve Webb: Find out how to ask the former Pensions Minister a question about your retirement savings in the box below

But when it worked out your pension entitlement, your National Insurance contributions for 2007/08 were not included.

This final year of contributions was only added onto your record in May 2008. At this point your state pension entitlement should have been recalculated, but this never happened.

As a result, you have been slightly underpaid for more than a decade. It was only the fact that you looked very carefully at the figures that this discrepancy came to light at all.

This is not the first time that I have come across a case where someone suddenly has one extra year of NI contributions added to their record long after the event.

I would encourage anyone reading this column who is short of a full basic state pension to check if this could apply to them.

It is probably particularly likely to happen when people have a state pension age which falls relatively early in the financial year – perhaps in April, May or June – as this could be before the previous year’s NI contributions have been included.

I asked the DWP to comment on your case. If anyone thinks this could be affecting them, I would be interested to have details.

Could your state pension be a year short of your NI record? 

If you think your final year of NI contributions got shaved off your record, write to us with the following details:

– Your date of birth

– Your BASIC state pension figure – this should appear on your annual statement

– How many qualifying years you have towards a state pension, or as near an estimate as possible

– Whether you were working and paying NI right up to state pension age, and if you remember it being recalculated shortly after you started drawing it 

– Your phone number – this will only be used to follow up this issue, not used for marketing purposes.

Email us at [email protected] and put DWP CLAIMS in the subject line. Please be aware that we cannot answer everyone. If you are concerned that you are being underpaid state pension, contact the DWP’s Pension Service. 

Ask Steve Webb a pension question

Former Pensions Minister Steve Webb is This Is Money’s Agony Uncle.

He is ready to answer your questions, whether you are still saving, in the process of stopping work, or juggling your finances in retirement.

Steve left the Department of Work and Pensions after the May 2015 election. He is now a partner at actuary and consulting firm Lane Clark & Peacock.

If you would like to ask Steve a question about pensions, please email him at [email protected]

Steve will do his best to reply to your message in a forthcoming column, but he won’t be able to answer everyone or correspond privately with readers. Nothing in his replies constitutes regulated financial advice. Published questions are sometimes edited for brevity or other reasons.

Please include a daytime contact number with your message – this will be kept confidential and not used for marketing purposes.

If Steve is unable to answer your question, you can also contact MoneyHelper, a Government-backed organisation which gives free assistance on pensions to the public. It can be found here and its number is 0800 011 3797.

Steve receives many questions about state pension forecasts and COPE – the Contracted Out Pension Equivalent. If you are writing to Steve on this topic, he responds to a typical reader question here. It includes links to Steve’s several earlier columns about state pension forecasts and contracting out, which might be helpful.