Pension top-up farce

ALL my confidence in the state pension top-up system has been drained by the stream of disturbing letters you have sent us.

This vital safety net for older savers with gaps in their National Insurance (NI) records — particularly working mothers who took a few years out to bring up children — is being undermined by Whitehall ineptitude.

There is no way HM Revenue & Customs (HMRC) should be pocketing sums of up to £2,000 of state pension top-up money when it won’t make a blind bit of difference to your retirement income. Yet you tell us this is exactly what’s been happening.

Officials should be working out whether you will benefit from the so-called Class 3 NI scheme — and spelling this out clearly — long before you hand over any money.

HMRC’s only defence is that it merely collects your cash, rather than works out your state pension entitlement. That crucial job falls to the Department for Work and Pensions (DWP). You might have thought that when DWP officials discover your top-up cash is pointless, they issue a refund automatically. But that task again falls to the taxman. And until it issued new guidance to staff recently, it usually refused.

We’ve found the taxman has been repeating the same excuse for withholding refunds, saying that even if your voluntary payments don’t boost your pension, they often give you extra ‘bereavement benefits’.

Never mind that nobody has heard of these bereavement ‘perks’ let alone wants them, nor that single people or those already beyond state pension age are unable to claim them. It’s like walking into a car showroom and paying for a Mercedes — only to be handed a rusty old bicycle and told to shove off.

I’d love to hear HMRC boss Jon Thompson explain the difference: in both cases, someone is guilty of banking cheques for something you never get.

The DWP and HMRC must stop blaming savers for a mess of their own creation and start talking to each other and being upfront with people. Officials should review every payment received to ensure nobody has been left out of pocket by this tangle of red tape.