Officials admit: We can’t tell you if your pension top-up will work

SAVERS are being told by the Government to seek expensive financial advice if they want to top up their state pensions — or risk losing thousands.

unable professional Officials Instead, income they to tell have savers make adviser, savers will told are make to Money if at being boost the an a voluntary difference. hourly Mail told their they to cost retirement ask payments are of a up a The joint to £200, revelation investigation to find has out emerged into if they’ll the state as benefit. part pension of its sister top-up website scheme by Money Mail and thisismoney.co.uk.

Some savers in their 60s claim to have been misled by officials who told them they could buy extra National Insurance (NI) years to increase their state pension. Some have spent thousands from their life savings to do so, only to fall foul of a quirk in the rules which means their pension does not rise after all. And even worse, they have been denied a refund from the taxman, who takes the payments. The Future Pension Centre, part of the Department for Work and Pensions, specialises in helping those yet to claim their state retirement income. But it has emerged this body can only give customers an ‘estimate’ of the difference the top-up ‘may’ make to payouts.

The DWP confirmed officials cannot confirm whether the saver will receive a benefit until after they have made the payment.

The taxman insists it does not have access to that information, it only collects the money. A DWP spokesman says: ‘We cannot provide advice. The Future Pension Centre gives an estimate of the impact on someone’s pension by paying voluntary NI contributions. It can guide that paying X years

may impact the pension by Y.’ Around 12,000 people a year use the Government’s voluntary Class 3 NI contributions scheme to fill in gaps in their NI records from the past six years (in rare cases, ten) by paying a lump sum. This should be a maximum of £741 a year, which buys an extra £237 a year income for life. But savers can pay in even if it doesn’t boost their payout. Six months after we launched our investigation, we are still being contacted by readers struggling to recoup thousands of pounds in useless payments. Mary O’Connor has spent six months chasing £3,398 she paid. In 2015 she asked the DWP how to boost her pension and says she was told she should make the payments. However, Mary, 64, only discovered last year, after reading Money Mail’s investigation, that the years she bought were worthless. She had no response to her HMRC refund request in November. When she rang the taxman this month, staff admitted her letter had not been acted on.

The former pharmacist, who has lived in northern Greece for 20 years, says: ‘It’s disturbing for the money to disappear. I was not told these contributions were unnecessary. I had no other source of advice. It’s not easy to find a financial adviser with knowledge of the British system here.’ The confusion around the scheme has come from the arrival of the single-tier state pension, now worth £164.35 a week, in 2016. To qualify for this amount, savers need 35 years of full NI contributions. They only required 30 to get the full basic £125.95-a-week pension under the old scheme. If the Government works out you would have been better off on the old scheme, and you had 30 years of NI contributions by April 2016, attempts to boost your pension may be futile. The Future Pension Centre can identify savers with missing NI years, but can’t say if they will benefit by buying more.

Often HMRC denies refunds, saying the money will instead pay for bereavement benefits for the customer’s spouse or partner if they die before state pension age.

However, these seem pointless to savers who are just a few years away from getting their pension.

Mike Fleming, 59, paid £2,728.40 in June 2016 for five years of topups after speaking to Pension Wise, the Government organisation which gives pension help.

Mike, an IT consultant from Romford, East London, realised his income had not risen a few months later. For 18 months he has made requests for his money back, but has been refused and passed between the DWP and HMRC.

The bereavement benefits are of no use to him as he is single. ‘I’ve found the whole thing frustrating,’ Mike says. ‘I don’t know who I could have spoken to for help.’

After Money Mail intervened, both Mike and Mary got a refund.

Patrick Connolly, of advice firm Chase de Vere, says: ‘Helping people boost their pension by filling in NI gaps is something financial advisers can help with, but it’s the kind of work that could cost around £200 an hour. For someone who is planning to rely on the state pension, that is very expensive.’

An HMRC spokesman says: ‘We are sorry some customers had to wait a little longer than we would like to get their money back. All those due repayments should have received them by now.’