Has UC removed my NI credits a year into my pension?

Noopin

My partner and I had a UC account from early days, a dozen years ago.  This made sense as I was self-employed throughout that period.
As I approached 66 years old at the start of 2024, I diligently checked and topped up my NI years until I had 35 full years.  Only around £2k altogether, covering about 8 shortfall years.

I had planned to defer for a year and keep working but, as soon as I informed UC, they stopped our claim on the grounds that I couldn’t say no to the pension while continuing to receive UC payments, and receipt of SP defeated the whole claim; even though I had been able to earn modest sums, up to about £1500pcm without denting the UC payment.  I’d imagined that the SP would be added into the calculation, along with the increments for part-time carer and limited capacity for work (my partner), in the same way as my earnings had been.

It was decided that I had to repay the three UC payments we received since the pension start date and that has been taken from my partner’s PIP.  Meanwhile, the full SP was arriving, covering the period starting on my birthday.

Yesterday, I received a letter telling me that my pension was being reduced as “HMRC have recently reconciled your records and have changed the calculation of your pension…” and “HMRC has removed several credits affecting the amounts…”

In effect, it’s reduced 4 full years to partial and dropped the pension from 229 to 203pw.  Today, I’ve spoken to DWP five times (cut off three times while they went to check something) and HMRC twice.  Eventually, the nearest that anyone would commit to an explanation was a suspicion that UC had removed some of the NI credits that they’d provided.

HMRC and I were looking at my NI record and I recognised a couple of the years that I knew I’d made up, now showing as incomplete.  The call-handler said he could see that eg.20/21 had had credits removed fairly recently.

My original questions were - who instigated the removals, and why; where did the money go to; is there any way to get back to 35 years?

It’s 16 months since I thought this was all settled and I was confident that I’d done the right thing to achieve 35 full years - I’m very unhappy that it’s come out of the blue and no-one can provide definitive answers.  I can see years where I know I paid the difference but, since the clawback, that’s now “wasted” money in terms of creating a full year because they’ve fallen below the threshold.

DWP tentatively suggested that I can still regain 3 partial years showing as “available” for voluntary payments.  But I paid up two of those at the start of 2024, and I’d still be only on 34 years.  

I feel as though I’ve fallen through a crack in the system, because the record showed 35 full years after the pension payments began.

Many thanks for getting through this, I can’t help thinking there must be others…

Ayr_Rage

35 years for a full SP is only 100% relevant for those born after the year 2000.

It may be coincidental that this is the number of years you required but your gov.uk information will have shown the exact information.

DRS1

DWP tentatively suggested that I can still regain 3 partial years showing as “available” for voluntary payments.  But I paid up two of those at the start of 2024, and I’d still be only on 34 years.  

If you do that how much will your pension go up to?  Don't focus on the years focus on the amount.

Hopefully someone will be along who knows why you might have been docked those NI credits.  You are sure it was to do with the UC and not somehow connected to you being self employed?  Some people on here who are self employed say they have not had years credited because they weren't properly registered as self employed. 

QrizB

Noopin said:

.mI had planned to defer for a year and keep working but, as soon as I informed UC, they stopped our claim on the grounds that I couldn’t say no to the pension

As I understand it, UC isn't payable once you reach state pension age. You claim your state pension and move to a different benefits structure.

Noopin said:

In effect, it’s reduced 4 full years to partial and dropped the pension from 229 to 203pw.  

The currrent "full" state pension is £230.25 a week. If you were receiving £229 you were already short, possibly through not having enough full NI years.

https://www.gov.uk/government/publications/benefit-and-pension-rates-2025-to-2026/benefit-and-pension-rates-2025-to-2026#state-pension

Each post-2016 year is worth £6.58 so yes, it looks as though you've had four years disallowed.

Do you know which years they are, and how much each is short by?

If DWP have removed credits for full years where you were in receipt of UC, you need DWP to reinstate them.

molerat

I can't see how a change in your UC entitlement resulting in a repayment at SP age has any bearing on the removal of NI credits from previous years.  IMO you are entitled to a full explanation of the reasons for this from HMRC - they are the ones who maintain the record and will know who instigated the removal, maybe not at front line CS level though.  If a reasonable answer is not forthcoming it would be worth involving your MP.  If the removal of those credits is justified then there should be no reason why you should not be entitled to make voluntary payments for those years whenever they were.

Noopin

It was definitely 35 full years to qualify for maximum pension and lately I’ve been receiving £919.56 per 4 weeks, ie £229.89 pw.

I can regain three partial years between 2019-2022 for around £840; it’s somewhat galling because I’d already got two of those up to full years.  That would take me to 34 years, which would give me 34/35 of £229.89 ie.£223, which is a loss of £338 each year.  Better than the current position, which will lose £1368p.a. or £13k over 10 years.

It might well not be related to UC, that was HMRC speculating (in other words, making it a DWP issue); I respectfully suggested that he should’ve been able to answer that question.  Whoever it was, it shouldn’t have taken more than a year to get to this point.  If I’d known where things stood as I approached 66, or in the first year following that, I could have replaced all four required years.  All I had to go on was the NI record, which categorically tells you which, and how many, years are full and how much the others are short.  When it confirmed 35, I felt the satisfaction of having done something useful and worthwhile; when the pension started, it was the full amount and I never looked at it again.

To be clear, because I only paid for the precise amount to make an eligible year, even a small credit reversal by HMRC would drop the year out, and the money I’d used to “buy back” a few weeks would count for nothing in that year.

QrizB

Noopin said:

It was definitely 35 full years to qualify for maximum pension and lately I’ve been receiving £919.56 per 4 weeks, ie £229.89 pw.

As above, £229.89 a week is not a full NSP. It might however have been the most you could personally achieve, having missed earlier years. And buying that final year might not have been worthwhile anyway; it would only have gained you 36p a week.

Noopin said:

I can regain three partial years between 2019-2022 for around £840

So HMRC have only partially revoked those years. That's something, I guess. We're you self-employed in those years?

Noopin said:

That would take me to 34 years, which would give me 34/35 of £229.89 ie.£223, which is a loss of £338 each year.

Filling three years will increase your pension by 3/35 of £230.25, which is £19.73 a week. That would put you on £223.31. (These figures might be out by a penny due to rounding).

Which is the fourth year you've lost?

It might be worth a complaint to HMRC since they were the people who told you in 2024 which years you could top up and what they would cost.

Noopin

Thanks, QrizB, let me try to clarify.

My figure of 229.89pw is only 36p away from your figure, and it’s what I’ve actually been getting.  Since the NI years either qualify or they don’t, different numbers of “paid” weeks won’t make a difference - ie. a “not full” year might have zero contributions or be just one week short, either way it won’t count.  I’m assuming my figure is effectively the full pension.  It was based on having 35 full years when I claimed it.

I don’t know how many weeks credit have recently been removed, or from which years (apart from 20/21, which HMRC confirmed); but it has reduced 4 years to below the qualifying level as, now, I only have 31 full years. There are only three recent partial years that I can make up at a cost of £840.  So, I’ll always be stuck on 34 qualifying years as we can no longer go back further than 5 years.  That 2.9% isn’t much but £338per annnum adds up over (fingers crossed) many years to come.

I’ve been self-employed for years, that’s why we were on UC and it seemed to work - it might be that some late alterations have happened before but I’d have had no reason to check my NI record previously.

QrizB

Noopin said:

My figure of 229.89pw is only 36p away from your figure, and it’s what I’ve actually been getting.  Since the NI years either qualify or they don’t, different numbers of “paid” weeks won’t make a difference - ie. a “not full” year might have zero contributions or be just one week short, either way it won’t count.  I’m assuming my figure is effectively the full pension.  It was based on having 35 full years when I claimed it.

For anyone with NI years prior to 2016 - which is essentially anybody retiring before 2068 - "35 years" is neither here nor there.

NI years prior to 2016 can be worth less than 1/35th of the NSP, and any SERPS/S2P accrual will add to if, while contracting out could reduce it.

You're lucky that having 35 years got you this close to a full NSP. Other people have reported needing more than 40 years.

Noopin said:

I don’t know how many weeks credit have recently been removed, or from which years (apart from 20/21, which HMRC confirmed); but it has reduced 4 years to below the qualifying level as, now, I only have 31 full years.

HMRC should be able to tell you exactly which years have been "lost".

Noopin said:

There are only three recent partial years that I can make up at a cost of £840.

Class 3 NI is currently £17.75 a week, which would suggest that you've "lost" ~47 weeks.

(If you were able to pay at Class 2 like most self-employed people, 3 full years would only be £546, so HMRC must be quoting Class 3. Have HMRC explained previously why you aren't able to pay Class 2?)

molerat

I assume you have access to your online tax account ?  If so everything will be clear from your NI record within that. The 4th year is likely outside the 6 year payment window but should be recoverable upon complaint.   

Noopin

I didn’t do the maths, I just looked to see how much they were asking to complete each partial year and started paying with the cheapest one, working my way up to 35 full years.
I’m not losing my marbles, it was definitely 35 full years that everyone was aiming for, surely?  After all, I started receiving the full pension (near as dammit) after reaching that, which was pretty much the clincher that everything was hunky-dory.

Reading further, there can be slight differences eg. depending on whether one was contracted out.

My partial year 21/22 currently shows 45 weeks NI credits and advises that £124.25 voluntary contribution will complete the year.  That equates to 7 weeks, thus they’re quoting £17.75pw, class3.  To be frank, the different NI classes are a mystery to me, I just declare my earnings & expenses and pay what’s asked.

But, if it’s UC that pays the NI credits to my account, they must be paying class3 as well…at which point, I can’t keep track of things.

My issue, really, presupposes that HMRC at least has one of those electrical, computation engines that figure out these things, but 16 months later won’t do.  It leaves me with limited options, further outlay to get some of it back but no chance of getting back to the top whack.

DWP promised me another letter, although on the phone they weren’t able to tell me anything beyond - HMRC told us to alter the pension payment according to how many full years were left after their retractions.

I suspect I’ll just end up paying for the available 3 years and nursing a grudge.