HMRC has said state pensioners can still make contributions towards their state pension after some received incorrect forecasts.
HMRC
HMRC has warned state pensioners to check their pensions – after an error dating back to 2016. HMRC has said state pensioners can still make contributions towards their state pension after some received incorrect forecasts.
The Labour Party government’s tax arm warned hundreds of thousands may have received forecasts suggesting that they were set to receive more than they would get in actuality.
Labour Party minister Torsten Bell was recently questioned about the issue by the Work and Pensions Committee. Regarding the State Pension blunder, a panel of MPs enquired about how “some State Pension forecasts may be inflated due to an HMRC error”, as the forecast “did not show deductions where people were contracted out before 2016”.
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In response, Mr Bell explained that the issue is “to do with customers who were contracted out and therefore would have been receiving the kind of equivalent of their earnings-related part of their State Pension through their private pension system”.
He explained: “The system that was providing State Pension forecasts – admittedly, with caveats, to be fair to the last Government, it would have been clear that it was not like an entitlement – provided forecasts that did not take into account that contracting out had taken place in all cases.”
Mr Bell stated: “I cannot tell you exactly how many people have been affected, because that will depend on how many people used the forecast model.
“We are obviously looking at that, but no one can give you a number for, ‘We know this many people in this year’.”
The minister said: “We are talking about largely people contracting between 2016 and about 2021. That is the phase we are talking about.”
Mr Bell explained: “First, the previous Government stopped providing forecasts and encouraged people to ring instead, when they were worried that people might be affected by this some time ago.
“And then secondly, we have now put in place permanent fixes that mean that people are getting forecasts that take into account their contracting-out status.”
HMRC said: “We can reassure that affected customers have not missed out, as they can still make voluntary contributions towards their State Pension for years they were contracted out.”
It is thought as many as 800,000 people could be affected.