Reports suggest an HMRC error could see thousands lose out.
Soon to be state pensioners have been issued a warning that they could lose £340 a year due to an HMRC blunder involving National Insurance charges.
Reports have surfaced indicating that a multitude of self-employed people have erroneously received refunds on their Class 2 National Insurance contributions (NICs) from HMRC. When the weekly flat-rate charge of £3.45 is reimbursed, HMRC views the entire year as having no valid NICs.
This mistake could significantly reduce the state pension sums workers are entitled to and may also impact their eligibility for certain benefits, as highlighted by personal finance specialists.
The amount you receive from the new State Pension is dependent on your National Insurance record.
A cautionary note has been sounded for workers (Image: Peter Burnett via Getty Images)
Those without any National Insurance contributions before 6 April 2016 will require 35 qualifying years to receive the full new State Pension upon reaching the State Pension age, reports Birmingham Live.
But the majority of people will have accrued or been allocated National Insurance contributions prior to 6 April 2016.
“One year missing would equate to around £342 less a year in state pension,” explained Ross Lacey, director and financial planner at Fairview, in conversation with the i Paper.
Lacey expressed concern over the many incorrect refunds, stating: “For those who’ve had their Class 2 NICs refunded incorrectly by HMRC, this will potentially impact the state pension they get in the future.
“It’ll be lower, as they haven’t received a credit in the years where no NI was paid. Many won’t necessarily realise that the contribution has been refunded as the total amount payable is actually quite low.
“But those missed years would cost them a lot more if the problem isn’t identified and addressed.
“Many very small businesses still do need to keep up their voluntary contributions and may mistakenly believe that they don’t,” he stated.
“It’s hard for people to get good, reliable information on their position.”
An HMRC spokesperson expressed regret over the situation, stating: “We’re sorry to those affected and are working hard to resolve the issue.”
