State pension cover-up: DWP admits Universal Credit records ‘still not fixed’

The government has admitted that an automated system intended to update the state pension records of millions of Universal Credit beneficiaries broke down in 2017 and will take another year to fix all the errors.

A This is Money investigation exclusively revealed that much National Insurance data is riddled with holes and that the government had evaded our attempts to expose the scandal.

Lost NI credits can lead to pensioners facing state pension shortfalls upon retirement unless they are secured in time.

The government was forced to open up about mistakes after Liberal Democrat Labor and Pensions spokeswoman Wendy Chamberlain asked for answers in parliament.

A letter to Chamberlain from Employment Secretary Guy Opperman confirms our report that people with Universal Credit only have their state pension data manually corrected when they reach state pension age.

But as we’ve found, they can fall through the net and end up with an underpaid state pension as a result, or waste money buying supplements they don’t need.

Opperman’s letter shows that an automated process to add Universal Credit applicants’ details to their state pension records was suspended in 2017/18 and corrections will not be completed until April.

“The vast majority of affected people are many years away from reaching state pension age and will not be affected by this issue if they apply for state pension,” he writes.

“For those who do need to claim their state pensions, HMRC and DWP have implemented a manual process to correct NI records and state pensions.”

Mr Opperman – the UK’s longest-serving Pensions Minister before his promotion last year after a five-year term – added: ‘For those already claiming their state pensions who are affected by this issue, their state pensions will be reinstated. assessed and any underpaid accordingly as part of normal processes.’

At the beginning of this year, nearly 5.9 million people had Universal Credit, and many more could have been affected if those no longer claiming were taken into account.

However, the DWP and HMRC have never officially brought any serious issues with these people’s state pension administration to light, either to the general public or to MPs.

And the Gov.uk website is currently still misleading Universal Credit claimants think their NI credit will automatically update.

This is Money was the first to reveal last November that a mysterious ‘glitch’ in state pension data was causing savers to struggle to close potentially costly gaps in their income.

Since then we have seen many more cases and revealed how people were antagonized by staff from three separate government departments – Universal Credit and the Future Pensions Center within the DWP, as well as HMRC – all of whom refused to help them.

Readers provided us with surprising evidence, in individual letters and an email to them from junior DWP employees, showing that it was a long-standing and internally known problem that there was no working system for automatically updating the NI credits from Universal Credit plaintiffs.

Lib Dem MP Wendy Chamberlain told us, “Retirees deserve better than being the collateral damage of failing government systems.

“Steps to rectify this are welcome, as is the government’s delay in revealing its mistakes.

“But the number of retirees who have come forward during this survey clearly shows that the manual process is not working. The government must act now to ensure that no pensioners go without, especially during this cost-of-living crisis.”

Former Pensions Secretary Steve Webb says of Opperman’s admission: ‘This letter reveals that the mess over the National Insurance records of people with Universal Credit has been going on for years and will take at least another year to sort out .

“Still, DWP made no effort to tell the public what went on behind the scenes, and especially to make sure people don’t risk wasting their money paying years of voluntary NICs that should be backed by credit.

“DWP admits in their letter that there are retirees who are underpaid, which shows that the current manual processes do not work reliably.”

Webb, now a partner at LCP and a columnist for This is Money’s pensions, adds: “There needs to be a culture change at DWP where they are transparent when something goes wrong rather than trying to scare people off with excuses.”

In response to the first case we raised, the government evaded our questions about the cause of the lack of NI appropriations and how many people were affected by it, saying, ‘For your background, there is no indication of a wider problem’.

We disputed this statement when we sent further business and reiterated our inquiries. But the government again tried to obscure the true situation for Universal Credit applicants, saying, “The vast majority of National Insurance credits related to benefit claims are automatically added to an individual’s account.”

The DWP also fobbed off a shadow Labor minister who tried to sort out the failures in early December.

Gerald Jones MP, shadow minister for Wales, asked in a written question ‘when the technical issues open since 2018 to allocate National Insurance credits to Universal Credit claims will be resolved’.

Opperman replied at the time: ‘The technical issues referred to have been identified and DWP has taken steps to correct them.’

The DWP and HMRC were contacted for comment but did not respond at the time of publication.

When we published our last story, we confronted them with 10 cases of missing credits and asked why they had tried to cover up serious mistakes in automatically updating the state pension data of people who claimed Universal Credit.

A DWP spokesperson said: ‘All matters raised have now been resolved and we are sorry for the inconvenience.

“We are working with HMRC on an improved process to add historical and future Universal Credit National Insurance credits to National Insurance records.”

The government told us that clients are advised by HMRC to wait for Universal Credit-related NI credits to appear on their file before making any voluntary payments required to qualify for that year, and that if unnecessary payments are made, they can be refunded.

However, people who are aware that they are missing NI credits have found it almost impossible to update them, and meanwhile many people may not know because the government’s website tells them that credits for their AOW are updated automatically.

The government issued the following further guidance to UC plaintiffs.

– The presence of a number of National Insurance credits for a given year does not necessarily mean that a customer will reach the threshold for it to count as an ‘eligible year’ for state pension purposes, once recorded by HMRC.

– Customers with questions, including those above the state pension age, can do so contact the universal credit helpline, or speak to their work coach or case manager.

> Savers FINALLY win the battle for NI credits: we highlight 10 cases here