A Million Pensions Worked Out On Wrong Payment Data


Almost a million retirement savers will have to get by with wrongly calculated pension payments because the tax man has pulled the plug on helping providers with the correct figures.

The problem is pension providers have guaranteed minimum pension records riddled with mistakes.

Up to October 31, HMRC is running a service to help them put their records straight in batches.

But from November 1, the service switches to case-by-case fact-checking, which is much slower.

Pension firms must have their bulk requests with HMRC by October 31, but may not receive the results until March 2019.


The slowdown will impact payments from the state pension and final salary schemes.

Slow to act

Financial firms and HMRC have known about the problem since 2014, but have been slow to act.

Consultancy Willis Towers Watson is highlighting the issue and reckons around a million pensioners are affected.

The wrong payments are unlikely to make a great financial difference to most pensions, but some are out between £5,000 and £10,000 over a pensioner’s lifetime which their providers will have to claw back at some stage.

The pensioners losing out retired before April 6, 2016.

They are entitled to a pension split into two parts – the basic state pension depending on their national insurance record and the state earnings related pension (SERPS).

Contracted out

Many retirement savers contracted out of SERPS, leaving them to pay less national insurance. In return, the employer paid a guaranteed minimum pension.

But providers and HMRC have found flaws in the guaranteed minimum pension records that mean errors creep through to their payment calculations.

Phil Titchener of Willis Towers Watson said: “GMPs are so complicated some people could end up with too little from the state and too little from their workplace scheme.”

Another GMP issue that needs fixing is equalising the payments for men and women., says Titchener.

“The government’s view is equalising for the effect of GMPs between men and women is required. However, the government has only proposed a method for equalisation, which includes, as a final step, converting GMPs into a potentially different form of pension,” he said.

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