Millions facing £1500 pension cash demand

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Millions facing £1500 pension cash demand

By Katie Smith

Glasgow Evening Times, May 15, 2003

Click for larger image BLUNDER: millions of workers will now have to make extra contributions to receive their state pension after a computer glitch.

A computer glitch meant up to 10million people, over a five-year period from 1996 to 2001, did not receive the normally-routine reminders from the Inland Revenue about making up their National Insurance contributions.

The blunder means millions of workers, most of them on low incomes, will have to make significant extra contributions to qualify for the minimum state pension of £77.45 a week.

If workers have any breaks in their work record, due to illness or unemployment, they may face a shortfall in the number of "years" they need to have been paying National Insurance for.

They are given the opportunity to plug these holes in their payments but now many workers will be told over the next 15 months to find up to £1500.

Treasury bosses are reportedly furious over the blunder, caused by a computer system changeover, particularly as it comes when the Government is battling to restore public faith in the pensions industry.

Steve Webb, the Liberal Democrats pensions spokesman, said: "It is frankly breathtaking that the Inland Revenue is going to have to issue 10m letters because of a computer blunder.

"More than a third of the workforce will get a brown envelope out of the blue telling them that their pension is incomplete and giving them a bill of up to £1500."

He added: "For someone on modest earnings these sorts of sums will seem very significant."

An Inland Revenue spokesman apologised for the blunder. To make up for the error, he said the deadline for top-up payments for the five years in question had been extended to April 2008.

He said: "Because people were not made aware of the fact that they could make additional contributions if they wished, the law does allow us to extend the deadline.

"No-one is going to be out of pocket because they are going to be given longer to make the extra contributions. We are very sorry if anyone has been inconvenienced."

He said normally only around 4% choose to make the top-up payments.

It is the second big pensions shock this week. On Monday it emerged around 150 staff of Edinburgh civil engineering firm Blyth & Blyth could be left without a penny of their company pension after the firm went into receivership.