HMRC Admits Nine-Year Error in State Pension Forecast Tool

HM Revenue and Customs (HMRC) has admitted a long-running error in its online state pension forecast tool that may have misled up to 800,000 people about how much they will receive in retirement. The mistake meant many workers were told they would get the full new state pension when they might actually receive less. 

The problem lay in how the “Check your State Pension” service treated years when people were “contracted out” of the additional state pension. During those years, National Insurance contributions were redirected to private or workplace pension schemes, which should reduce the state pension later. The online tool did not fully account for these periods, so it often showed higher forecasts than people will actually receive. 

The forecasting service was launched in February 2016, just before the new state pension system began in April 2016. By 2019, around 360,000 users had already been given incorrect estimates in the first three years of the tool’s use. Government ministers were told about the flaw as early as 2017, but only partial fixes were implemented in 2021, and the error persisted for years. 

HMRC has now updated the online calculator in February 2026 to include contracted-out years for people reaching state pension age after April 2029. The department advised users who will retire after the specified date to wait until 14 February to review their forecasts, allowing them to view the corrected figures. For those reaching pension age before April 2029, earlier fixes mean forecasts should already be more accurate. 

The impact is that some people may now face a smaller state pension than they planned for, potentially losing hundreds or even thousands of pounds a year in retirement income. Because the tool suggested they had enough qualifying years, many have missed chances to pay extra National Insurance contributions to boost their pension. HMRC has apologised for the problems the tool caused, saying it is sorry for the stress and uncertainty experienced by users. 

Experts warn that anyone who checked their forecast in recent years should review it again using the updated service. They also advise people to treat the forecast as a guide, not a guarantee, and to seek independent pension advice if they are worried about shortfalls. For now, HMRC states that the corrected tool should provide a clearer picture of future state pension entitlements, particularly for those retiring after April 2029.