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One Million Eligible for £70 Pension Refund, Not a Scam, HMRC Says
Confirmed
In Short: HMRC is contacting one million people who may be owed up to £70 each due to a pension scheme discrepancy, emphasizing the letters are legitimate and not a scam.
HMRC is reaching out to one million individuals who may be eligible for a £70 pension refund, addressing a discrepancy in how low earners' pension tax relief was administered.
HMRC is providing clear information and allowing those who are digitally excluded to contact them to accept the payment, ensuring recipients are not cautious about unexpected communications.
Sir Steve Webb, a pensions expert, expressed shock at the scale of the issue, highlighting that many people might ignore the letters, potentially leaving millions of pounds unclaimed.
The letters, which are being sent gradually over the next few months, are expected to reach around 1.2 million people, with women making up roughly three-quarters of the eligible recipients, totaling about 990,000 women.
What's confirmed
- They missed out on pension tax relief because of the way their scheme was run.
What's still developing
- Anyone eligible - the vast majority of whom will be of working age rather than pensioners - will be contacted automatically.
- Employees have no control over the type of scheme that's used, so the government has decided to make up the difference to those who have missed out, through what's called a low earner's pension payment.
- Sir Steve Webb, partner at pensions consultancy LCP and a former pensions minister, said he was shocked at how few people the government expected to actually receive the payment.
- You may be among the one million people, mostly women, who will receive letters explaining how you are eligible for top-up payments - and it's not a scam.
- Those entitled are low earners who have missed out on the money because of the way the pension they pay into is administered.
- When you pay into a pension, the government allows some of the money that would otherwise have been paid in tax to go towards your pension instead.
- For relatively complicated reasons, some low earners whose employer used what's known as a Net Pay Arrangement pension scheme received less than those whose pension was administered through a Relief at Source scheme.
- If eligible, you'll be sent information by HMRC - the UK's tax authority - in a letter or through your online personal tax account, external.