The £70 refund letter that isn't a scam

Around one million people, predominantly women, will soon receive letters informing them that they qualify for additional pension payments. These notifications are genuine and not scams. The payments are aimed at low earners who have missed out on certain pension top-ups due to the specific way their pensions are managed.

HM Revenue and Customs (HMRC) is responsible for sending out these letters over the coming months. Recipients are typically entitled to around £70, though actual amounts can differ based on individual circumstances. Eligible individuals will be contacted automatically, but it is important to verify the authenticity of any letter received to avoid falling victim to fraud.

The reason for these payments stems from differences in how pension contributions receive tax relief. Some low-income workers with a Net Pay Arrangement pension scheme have received lower benefits than those with a Relief at Source scheme, despite neither the employer nor employee having control over the scheme type. The government has therefore introduced a low earner’s pension payment to compensate those affected, mainly targeting individuals earning close to but not exceeding £12,570 a year, which is the threshold for paying income tax. These top-ups will initially cover the 2024-25 tax year, with plans for automatic payments in subsequent years.

Verification of the letters is crucial because HMRC will not initiate contact by phone, email, or text regarding this payment. If such contact is received, it should be treated as a scam. HMRC will never request money transfers, PINs, or passwords. To confirm legitimacy, individuals should ensure HMRC has their correct address, check the official government website for guidance on identifying genuine communications, and use their personal tax account to provide any necessary bank details. For those without online access, HMRC offers phone support to accept payments. According to an HMRC spokesman, “We know some people may be cautious about unexpected contact, which is why we provide clear information about what to expect and how to verify the contact is genuine,” also advising that “Customers can check a letter is genuine on Gov.uk and should only respond via official HMRC channels.”

Despite the government’s efforts, some experts are concerned about low uptake. Sir Steve Webb, a former pensions minister and current partner at pensions consultancy LCP, expressed surprise at how few people the government anticipates will claim their payments. He warned, “The process of getting these payments to the right people is going to be incredibly painful and there is a real risk of huge non take-up,” adding that “It is vital that communications are effective to make sure that people get the money to which they are entitled.” In response, HMRC plans to launch an awareness campaign through social media and other platforms to ensure those eligible are informed

Read the full article from The BBC here: Read More