MILLIONS of Universal Credit claimants could be missing out on hundreds of pounds due to a “mystery” glitch.
State pension records for people who claim Universal Credit are said to be “riddled” with errors, This is Money reports.
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The system which is supposed to update National Insurance (NI) credits for people on Universal Credit automatically is reportedly not working.
If you’re on benefits, and as long as you’re satisfying all the requirements, you get the credit towards your state pension.
So it’s as if you have been paying your National Insurance.
The gov.uk website says that Universal Credit claimants will “automatically” have the credit added to their records, but this appears to not be taking place in several cases.
Claimants are instead having their NI records corrected manually when they reach four months of state pension age.
Although, some people’s records seemingly aren’t being corrected and they have therefore been underpaid.
While others could have wasted their cash by buying NI top-ups when they don’t actually need to.
It takes 35 years of NI contributions (NICs) to get the full amount of state pension, but you can pay for the gaps to be filled.
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One woman received £667 after This is Money took her case to HMRC and the Department of Work and Pensions (DWP) after she attempted to chase missing credits herself.
Since 2018, millions of Brits have claimed Universal Credit, with 4.8million having claimed the benefit as of August 2022.
If you’re missing credits it can mean that you lose money in your pension when you retire.
A DWP spokesperson told This is Money: “All of the cases raised have now been resolved and we are sorry for any inconvenience caused.
“We are working with HMRC on an improved process to add historic and future Universal Credit National Insurance credits to National Insurance records.”
LCP partner and former pensions minister Steve Webb told The Sun: “These days, those credits are just as good as if you’d been paying NI – so they’re really really important.
“People on UC have been reporting that they’ve checked their NI record and there’s no sign of the credits.”
He said that people have reported that they have gone to the DWP and were told to check with HMRC.
They have then been told it is in fact under the DWP’s jurisdiction.
Steve said: “So they’ve gone back to the DWP who have said there isn’t quite a system for that yet but don’t worry, we’ll sort it out before you retire.
“Now, there’s a number of problems with that.
“One is that they aren’t sorting it out for everyone because This is Money has someone who is in retirement, drawing a pension and is missing credits and they’ve now had to give her nearly £700 of back pension.”
The second issue is that the argument that the issue will be fixed four months before you retire doesn’t really help people who are looking to retire imminently.
Steve said: “That’s because people sit down at 60, 61 or 62 and look at their NI record and if there’s gaps, they pay money to fill them.
“So it means that people are wasting their money paying voluntary NICs when they should have the credit on their record already.”
The third problem, according to Steve, is that people are wasting their time chasing up credits when they should be automatically added to their records.
He added: “People have had letters from the DWP saying they’re working on a computer system to do all of this – so what that means is that all the stuff they’ve said publicly about it being automatic just isn’t true, they haven’t done it yet.
“Of course if you’re 32 then chances are they’ll have it all sorted out before you need to worry about it.
“But if you’re retired or coming up to retirement and thinking about your NI record and paying NICs then it’s a huge worry.”
Steve also pointed out that a government scheme which allows people to fill in gaps in their NI record is ending in April.
Currently, you can top up for any missing years dating back to 2006 but a six-year limit will return on April 5, restricting how far you can go back to 2016.
So this means that people will be trying to top-up contributions in time for the deadline – when they may not even need to.
A DWP spokesperson told The Sun: “We are working with HMRC on an improved process to add historic and future Universal Credit National Insurance credits to National Insurance records.”
What are the state pension rules for Universal Credit claimants?
If only one of you has reached state pension age, you and your partner can still claim Universal Credit as a couple.
Your Universal Credit claim will stop when you both reach state pension age.
If you’re getting Pension Credit, it will stop if you or your partner make a claim for Universal Credit.
The government says you’ll usually be better off staying on Pension Credit.
You can check using a benefits calculator online.
How much is the state pension?
The maximum new-style pension you can get is £185.15 a week, or around £9,627 a year.
This is going up by 10.1% from April following the government’s Autumn Statement last year.
That means the weekly allowance will rise to £203.85.
While the state pension might not be enough to live off alone, getting the most from it can give your finances a big boost.
Here are five things you can do to boost your state pension in 2023.
How do you qualify for the state pension?
The full state pension is only paid to those with a minimum 35 years of national insurance contributions.
This is one of the taxes you pay while working and builds up your entitlement to the state pension.
There may be gaps if you were unemployed, lived abroad or took time off to care for children or relatives, which means you could get a lower amount.
But in some cases, you can apply for credits to top up your retirement fund.
You need at least 10 years of qualifying national insurance contributions to get any state pension payments.
This doesn’t have to be from 10 years working in a row.
You can build up your eligibility as long as you have paid national insurance contributions for the equivalent of a decade during your working life.
It is possible to make voluntary national insurance contributions to top up your record, usually from the previous six years.
You can use a government tool to find out how many years of contributions you have and how much state pension you’re likely to get.
But savers are facing a four-year wait for much anticipated new technology that will let them view all their pension pots in one place online.
