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.
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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.
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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.