HMRC State Pension Underpayment Arrears 2025 Update

If you’ve ever wondered whether you’re getting the full amount of your State Pension, you’re not alone. Thousands of UK pensioners have recently discovered they were underpaid for years — some missing out on thousands of pounds. These are known as HMRC State Pension underpayment arrears, and understanding them could make a real difference to your finances.

In this guide, we’ll break down what these underpayments are, who’s affected, how to check if you’re owed money, and what steps you can take to claim it back.

What are HMRC State Pension Underpayment Arrears in the UK?

How do underpayment arrears happen in the UK State Pension system?

Underpayment arrears occur when a pensioner has been paid less than they were entitled to. This usually happens because of administrative errors, missing National Insurance (NI) records, or changes in marital status that weren’t reflected in the pension calculation.

The HMRC (Her Majesty’s Revenue and Customs) handles NI records, while the DWP (Department for Work and Pensions) calculates and pays the State Pension. When these records don’t match perfectly, errors can slip through the cracks — and those mistakes can last for years before being spotted.

What is the difference between DWP and HMRC responsibilities for pension payments?

Simply put:

Organisation	Main Responsibilities	Examples of Their Role	What Can Go Wrong
DWP (Department for Work and Pensions)	Calculates and pays the State Pension; handles pension claims, adjustments, and increases	– Decides how much State Pension you receive – Adjusts pension after marriage, divorce, or bereavement – Issues pension statements and letters	If DWP isn’t notified of life events (like marriage or widowhood), the pension may not be correctly updated
HMRC (His Majesty’s Revenue and Customs)	Maintains your National Insurance (NI) record and employment history	– Tracks NI contributions and credits – Updates records for stay-at-home parents or carers – Provides data to DWP for pension calculations	Missing or incorrect NI credits can lead to a lower pension being calculated
Both Together	Share data to ensure your pension entitlement matches your contribution history	– DWP uses HMRC data to determine your entitlement – Regular record updates between both departments	When records don’t match, State Pension underpayment arrears can occur

When there’s a mismatch between these systems — for example, a missed NI credit for a stay-at-home parent — an underpayment may occur.

Why Have Thousands of UK Pensioners been Underpaid by HMRC and DWP?

What caused the large-scale State Pension underpayment errors?

The most recent wave of underpayment issues was linked to old computer systems and complex eligibility rules for people who retired before April 2016 (under the “old State Pension” system).

Women, in particular, were disproportionately affected — especially widows, divorced women, and married women who should have received a pension based on their husband’s NI record.

Which groups of people are most affected by these pension underpayment arrears?

The main affected groups include:

• Married women who reached State Pension age before April 2016

• Widows and widowers whose pension wasn’t correctly increased after their partner’s death

• Over-80s receiving a Category D pension

• People entitled to Home Responsibilities Protection (HRP) but missing credits on their NI record

How much money has HMRC and DWP promised to repay to those affected?

According to the latest DWP update (2025), more than £700 million has already been identified for repayment, and tens of thousands of pensioners have been contacted. Some individuals have received back payments exceeding £10,000.

“The State Pension underpayment issue is one of the largest correction exercises ever undertaken by the DWP,” said Sir Steve Webb, former Pensions Minister. “It’s vital that people check their records — the difference could be life-changing.”

How Can you Check if You Are Owed HMRC State Pension Underpayment Arrears?

How to use the HMRC and DWP tools to check your pension records

You can check your State Pension forecast and National Insurance record online via:

• The official HMRC Personal Tax Account

• The DWP “Check your State Pension” service

These tools let you see your contributions, forecast your payments, and spot any missing NI years.

What documents or information do you need to confirm your pension entitlement?

Before you contact HMRC or DWP, gather:

• Your National Insurance number

• Your State Pension award letter

• Marriage, divorce, or death certificates (if relevant)

• Proof of work or caring responsibilities

This documentation helps officials verify your eligibility and process claims faster.

What should you do if you suspect an underpayment but haven’t been contacted?

If you think you’ve been underpaid, don’t wait to be contacted — reach out directly. You can contact:

• The Pension Service (for most enquiries)

• HMRC National Insurance helpline (for missing contributions)

Be prepared to provide supporting evidence, especially if your situation involves a change in marital status or caring responsibilities.

How are HMRC State Pension Underpayment Arrears Calculated?

What factors determine the amount of backdated pension owed?

Arrears depend on several factors, including:

• The type of pension (basic, married woman’s, widow’s, etc.)

• The date the underpayment started

• Any relevant life events, such as a spouse’s death

• Interest applied to back payments (usually simple interest, not compound)

How long back can HMRC and DWP pay arrears for pension errors?

Generally, the DWP can pay backdated arrears to the date of entitlement — sometimes going back decades. If someone has passed away, the estate or next of kin may still receive the payment.

Example Table: How State Pension underpayments and arrears are calculated

How Do You Claim Your HMRC State Pension Underpayment Arrears?

What are the official steps to claim arrears from HMRC or DWP?

1. Check your records online (via GOV.UK).

2. Call the Pension Service if you suspect an underpayment.

3. Submit evidence (marriage certificates, NI record corrections, etc.).

4. Await confirmation and written calculation from DWP.

5. Receive your arrears as a lump-sum payment directly into your bank.

How long does it take to receive back payments once confirmed?

Once your HMRC State Pension underpayment arrears have been confirmed, the next question on everyone’s mind is — “When will the money actually arrive?”

In most cases, it takes around 8 to 12 weeks after the Department for Work and Pensions (DWP) has verified your entitlement. However, the timeline can vary depending on your situation.

Here’s a breakdown of what influences the processing time:

• Type of case:
  Straightforward claims (like missed automatic pension increases) are processed faster than complex ones involving multiple NI record corrections or deceased claimants.

• Volume of claims:
  Since 2021, DWP has been handling thousands of reviews, which can slow things down.

• Evidence verification:
  If additional documents are needed — such as marriage certificates, proof of care years, or estate authorisation — this can extend the waiting period.

• Manual calculations:
  Some older pension records are still processed manually, which takes longer to audit and confirm.

Once your claim is approved:

• You’ll receive a written confirmation letter explaining how your arrears were calculated.

• The lump-sum payment is sent directly to your bank account via BACS.

• You may also receive a breakdown showing how much relates to each year or event.

Tip: If you haven’t received payment within 12 weeks after receiving your confirmation, call the Pension Service helpline to check the progress.

Can someone claim arrears on behalf of a deceased relative?

Yes — and this is an important point that many families overlook. If your spouse, parent, or relative passed away before receiving their underpaid State Pension, the arrears don’t disappear.

In fact, DWP has confirmed that next of kin or executors of an estate can request or receive the owed amount.

Here’s how it works:

• Check if the deceased person qualifies:
  The same groups apply — mainly widows, married women on the old system, or those with missing NI credits.

• Gather documents:
  You’ll need:

  • The death certificate

  • The Will or grant of probate (if available)

  • Proof of your relationship (e.g., marriage or birth certificate)

• Contact the DWP Bereavement or Pension Service:
  Explain that you believe the deceased was underpaid and provide all supporting details.

• Payment process:

  • If the estate is still open, the arrears are paid directly into the estate’s account.

  • If the estate is closed, you may need to reopen it or provide evidence of next-of-kin status.

Are There Tax Implications on HMRC State Pension Underpayment Arrears?

Will arrears be taxed in the year you receive them or spread over previous years?

This is a question that catches many by surprise — and yes, HMRC may tax your arrears.

Normally, all pension arrears are treated as income in the year you receive them. So, if you get a large lump sum, it could temporarily push you into a higher tax bracket.

However, there’s some good news. You can ask HMRC to “spread” the payment across the years it actually relates to. This means the arrears are taxed as if you had received them in the correct years, which often results in paying less tax overall.

Here’s how it works in practice:

• Option 1 – Standard taxation: The full lump sum is taxed in the year of payment.

• Option 2 – Spreading relief: You contact HMRC to request recalculation across previous years.

You can do this by writing to HMRC or calling their Income Tax helpline (0300 200 3300).

What HMRC guidance applies to State Pension back payments and tax adjustments?

HMRC’s official rules on this are found in INTM161260 (their internal manual). It explains that pension arrears are classed as “late payments of income”, meaning they’re taxable but eligible for fair adjustment.

Key takeaways:

• You don’t need to declare State Pension arrears separately if you’re already under PAYE.

• HMRC will automatically update your tax code to reflect the arrears amount.

• If you believe you’ve been overtaxed, you can request a tax refund through your Self Assessment or directly from HMRC.

Always keep your DWP arrears letter — it contains the date and total amount HMRC needs to calculate your tax correctly.

What Lessons Can UK Taxpayers Learn From the HMRC Pension Underpayment Cases?

How can you avoid future pension miscalculations or missing contributions?

• Check your NI record annually

• Update HMRC after life events like marriage, divorce, or retirement

• Keep paper and digital copies of pension statements

• Confirm your State Pension forecast at least once every 2–3 years

Conclusion

In short, HMRC State Pension underpayment arrears aren’t just headlines — they’re real money owed to real people. Whether you’re retired, approaching retirement, or helping a family member, taking a few minutes to check your pension record could uncover thousands in missed payments.

Stay proactive, keep your details up to date, and don’t hesitate to contact HMRC or DWP if you think something’s wrong. Your pension is your right — make sure you’re getting every penny of it.

FAQs about HMRC State Pension Underpayment Arrears

How do I contact HMRC about pension underpayment arrears?

You can call the Pension Service helpline (0800 731 0469) or write to your local Pension Centre. For NI record errors, contact the HMRC National Insurance helpline (0300 200 3500).

How far back can the DWP pay pension arrears?

There’s no fixed limit — payments can be backdated to your original entitlement date, even decades back, if the DWP admits fault.

Do HMRC pension underpayment arrears affect my benefits or tax code?

Yes, arrears count as income for the year received, which might affect your tax code or benefits temporarily.

What if my partner or parent passed away before receiving pension arrears?

Their estate or next of kin can still claim the arrears. DWP will usually trace eligible estates automatically.