The Department for Work and Pensions (DWP) has identified a series of common mistakes that are leading to state pension payments being stopped or reduced for thousands of retirees across the UK.
Critical Errors Impacting Your Retirement Income
Between 11 January 2021 and 31 March 2025, official checking processes uncovered a staggering 130,948 underpayments, with a total value of £804.7 million owed to pensioners. This highlights the severe financial consequences of simple administrative oversights.
The state pension is paid at two primary rates: the Full New State Pension and the Basic State Pension. Thanks to the Triple Lock commitment, the full new state pension is set to rise to £241.30 per week in April. For those who reached retirement age before April 2016, Chancellor Rachel Reeves confirmed the basic rate will increase by roughly £439 a year, bringing the annual total to £9,614.80.
The Five Major Pension Pitfalls
1. Not Claiming Child Benefit from HMRC
Many parents are unaware that claiming Child Benefit is crucial for building their National Insurance contributions (NICs). You typically need 35 years of NICs to receive the full state pension. While employed individuals build contributions through wage taxes, claiming Child Benefit automatically credits you with NICs until your youngest child turns 12, even if you are not earning. These credits are vital for protecting your future pension entitlement.
2. Overlooking Other DWP Benefits
You may be eligible for National Insurance credits if you are not working due to illness or unemployment and are claiming certain benefits. These Class 1 credits count towards your state pension and can help you qualify for other support, such as New Style Jobseeker’s Allowance. It is essential to check your National Insurance record and contact HMRC if any credits are missing or incorrect.
3. Failing to Claim Credits Due to Stigma
A significant "hidden" category of credits requires active application; they are not awarded automatically. This poses a risk for individuals who assume the government is tracking their eligibility. You may be entitled to credits if you are:
- Over 18 and in approved full-time training (for up to one year).
- Caring for someone.
- Unemployed, actively seeking work, and not in full-time education or paid work for 16+ hours a week.
If you are not receiving Jobseeker's Allowance, you must contact your local Jobs and Benefits office to claim these credits.
4. Gaps in Your National Insurance Record
Gaps can occur for various reasons, including periods of low earnings, unemployment without benefit claims, self-employment with small profits, or living abroad. Having fewer than 10 qualifying years can mean you receive no state pension at all. The good news is you may be able to pay voluntary contributions to fill these gaps and boost your pension.
5. Historic DWP State Pension Errors
The DWP has launched multiple correction exercises to address historical injustices. One error related to "Home Responsibilities Protection" has resulted in average back payments of between £5,000 and £8,000 for those affected. Separately, an estimated 200,000 female pensioners are collectively owed up to £2.7 billion due to an error in the old system, where married women could claim a 60% basic pension based on their husband's contributions.
Protecting Your Financial Future
These widespread issues underscore the importance of proactively managing your National Insurance record and understanding your entitlements. Regularly checking your contribution history and claiming all eligible benefits and credits can prevent devastating interruptions to your retirement income. With millions still owed in underpayments, ensuring you are not missing out is more critical than ever.
