Hundreds of thousands of people across the UK were given an inaccurate picture of their retirement income after a long-running HMRC state pension error led the government’s forecasting system to overstate future entitlements, raising serious concerns about retirement planning decisions made over almost a decade. The issue centres on a pension forecast tool problem within the online service operated by HM Revenue & Customs, which failed to properly reflect gaps and complexities in National Insurance records for certain groups of contributors. As a result, many users were shown figures suggesting they were on track for a higher state pension than they are now expected to receive under current rules.The scale of the problem only came fully to light after a detailed investigation by the Telegraph, prompting HMRC to confirm the error had now been fixed, reports The WP Times.
How the HMRC pension forecast tool problem developed
The pension forecast tool is designed to show individuals how much state pension they are likely to receive at retirement, based on their National Insurance contribution history. Introduced to simplify long-term planning, it became a widely used reference point for people deciding whether to make voluntary top-up contributions or adjust their retirement age expectations. However, between 2016 and early 2025, the system did not correctly account for certain transitional rules introduced when the new state pension replaced the old system.
In particular, the tool struggled with cases involving people who had periods of contracting out, gaps in contributions, or complex employment histories. Instead of flagging these issues clearly, the system often projected a higher weekly pension than would be paid in reality. HMRC later acknowledged that the problem persisted for almost nine years before being corrected.
How many people were affected and why it matters
HMRC estimates cited during the investigation suggest that up to 800,000 people were shown inflated state pension forecasts, meaning they were led to believe they would receive a higher weekly pension than they are now entitled to under current rules. While the actual pension paid by the state was never changed, the forecasts played a critical role in how individuals planned for retirement over nearly a decade.
For many users, the forecast was not treated as a rough guide but as a planning benchmark. People relied on it to decide whether to keep working beyond state pension age, whether to pay voluntary National Insurance top-ups, and how much additional private pension saving was necessary. An overstated forecast could therefore lead to systematic under-saving, particularly among those on middle or modest incomes who had limited flexibility to make late financial adjustments.
A higher projected pension often discouraged people from filling contribution gaps, especially where voluntary payments appeared unnecessary based on the figures shown. In reality, those missed years may now be more expensive to buy back, or no longer eligible at all, depending on age and individual contribution history. For someone missing even one qualifying year, the long-term impact can amount to thousands of pounds over retirement.
Pensions specialists also warn of a significant behavioural and psychological impact. Confidence in a secure retirement income shapes major life decisions, including when to retire, whether to downsize property, how much financial support to offer adult children, and whether to take on financial risk later in life. When that confidence is based on incorrect information, the consequences can surface suddenly and with little time to recover.
Those closest to retirement age are considered most exposed, as they have limited scope to correct errors once they come to light. Campaigners argue that even if no immediate compensation is owed, the scale and duration of the error raise serious questions about how official pension information is communicated — and whether individuals were given sufficient warning that the figures could be wrong.
What HMRC has said about the state pension error
HMRC has acknowledged that a long-running technical fault within its online state pension forecast tool has now been corrected, following scrutiny of the system’s underlying calculations. In a statement, the department said it had “identified and fixed a calculation issue affecting a defined group of users with particular National Insurance contribution histories”, confirming that the error had persisted for several years before being addressed.
The tax authority has been keen to draw a distinction between forecasting errors and legal entitlement, stressing that the problem did not alter the state pension individuals are entitled to under legislation. Instead, HMRC said the issue related solely to how projected pension figures were presented to users online, particularly in cases involving complex or transitional contribution records. Officials emphasised that pension payments themselves will continue to be calculated correctly at the point of retirement.
HMRC also said it is carrying out further work to review historical forecasts and improve explanatory guidance within the digital service, so users can better understand how their projected pension is derived. This includes clearer messaging around National Insurance gaps, contracted-out periods and the limits of forecast accuracy.
However, the department has not committed to proactively contacting all individuals who may have received incorrect forecasts. Instead, HMRC has urged users to log in to their online accounts and check their updated state pension projections themselves. Campaigners argue that this approach risks leaving some affected individuals unaware of the correction, particularly those who checked their forecast years ago and have not revisited the system since.
Key facts at a glance
| Item | Details |
|---|---|
| Period affected | 2016–2025 |
| Estimated users impacted | Up to 800,000 |
| Type of error | Overstated state pension forecasts |
| Root cause | Incorrect handling of complex NI records |
| Current status | Tool corrected, reviews ongoing |
Who is most at risk of being misled
Pensions experts say certain groups are more likely to have been affected by the HMRC pension forecast tool problem. These include people who were contracted out of part of the state pension, those with periods of self-employment, and individuals who took career breaks. Women, in particular, may be disproportionately impacted because of time spent out of the workforce for caring responsibilities.
People approaching retirement age are also at higher risk, as they have less time to correct contribution gaps once an error is discovered. Financial advisers recommend that anyone within ten years of state pension age should treat online forecasts as a starting point rather than a final answer.
What you should do now if you relied on an HMRC forecast
Anyone who has checked their state pension online in recent years is being urged to log back in and review their forecast again. Comparing the updated figure with previous screenshots or records can help identify whether the estimate has changed. If there is a significant difference, it may be worth requesting a detailed breakdown of National Insurance contributions. Independent advisers also suggest considering whether voluntary contributions are still possible and cost-effective. In some cases, paying for missing years can significantly increase weekly pension income over retirement. Keeping written records of any guidance received may also be important if disputes arise later.
Wider implications for trust in pension information
The HMRC state pension error has reignited debate about transparency and accountability in public-sector financial tools. Critics argue that relying on digital forecasts without clearer warnings exposes users to unnecessary risk, particularly when decisions involve decades-long financial planning. There are also calls for clearer signposting that forecasts are estimates, not guarantees. For policymakers, the episode highlights the challenge of simplifying complex pension rules without oversimplifying the reality. While the fix to the pension forecast tool addresses the immediate technical issue, rebuilding confidence among users may take longer.
What this episode reveals about retirement planning in the UK
The pension forecast error serves as a reminder that retirement planning in the UK remains highly individual and often complicated. Automated tools can be useful, but they cannot fully replace personalised checks, especially for those with non-standard work histories. As the state pension continues to form the foundation of retirement income for millions, accurate and transparent information is essential. For now, the priority for individuals is to review their own position carefully, verify figures independently where possible, and seek advice if something does not add up. The correction of the HMRC tool is an important step, but the responsibility for understanding one’s pension outlook ultimately still rests with the individual.
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