Up to 500,000 women pensioners are owed at least £1 billion in unpaid state pension benefits, The Times can reveal.

Flaws in the pension system and the failure of successive governments to record women’s tax details properly means that hundreds of thousands of mothers who gave up work to care for their children have lost out.

A six-month investigation by The Times, using the Freedom of Information Act, parliamentary questions submitted by the Liberal Democrats and number-crunching by the leading accountancy firm Grant Thornton, has found that many female pensioners are unaware that they are missing out on an average of several thousand pounds each.

Under Home Responsibilities Protection (HRP), introduced in 1978, women who stopped working to bring up children and received child benefit should be automatically rewarded in retirement with a boost to their state pension. It is not the responsibilty of the pensioner to claim HRP: the Pension Service should do it for them. If the system is working properly, HRP reduces the number of years of national insurance contributions women need under their belt to qualify for a full state pension. Accurate national insurance records are crucial.

The Times has learnt, however, that no checks were made by the Child Benefit Office to verify national insurance numbers until 1994 because women did not have to supply these details on their forms. It was not until May 2000 that it became mandatory for child benefit customers to do so.

In a response to a Freedom of Information request made by The Times, Revenue & Customs admitted that it knew of the problem with HRP. “We have been made aware of certain instances where HRP has not been recorded on customer’s accounts, and to raise customer awareness of how HRP’s work, the DWP’s [Department for Work and Pensions] pension literature contains extensive HRP information.”

Steve Webb, pensions campaigner and the Lib Dems’ policy chief, said: “Women already get a raw deal when it comes to pensions, which makes it all the more important that they get what they are entitled to.

“Parliament decided decades ago that women’s caring work should be recognised in the pension system, but for many women, successive Tory and Labour governments have failed to make sure that this happens in practice. We now need an urgent investigation by the Government into which women are missing out, and urgent action to pay them back what they are owed. I am more than willing to take cases to the Parliamentary Ombudsman if the DWP fails to take this issue seriously.”

The total shortfall is about £1 billion although it could be a lot higher. Mike Warburton, senior tax partner at Grant Thornton, said: “I have been concerned for some years that the system has been failing female pensioners. The information extracted by The Times and Liberal Democrats at last allows us to assess the size of the problem and will, I hope, lead to good news for many pensioner families.”

Despite claiming that The Times’ statistics are “completely wrong”, the Government was unable to provide any figures of its own.

A DWP spokesman said: “There were procedures in place throughout this period to ensure that women did get HRP, even if they did not put their national insurance number on the child benefit form. If anybody has been affected, it will be a small number. However, we are happy to look into any exceptional cases and increase their state pension if appropriate.”

Anyone who thinks they may not be receiving their full pension entitlement can call 0845 3021479. The Times, the Lib Dems and Grant Thornton initially identified the number of women over the age of 60 using data from the Office for National Statistics. We then established the proportion who had children and had therefore qualified for child benefit. HRP was introduced in 1978 so we looked for children born post1962.

Then, from a parliamentary answer, we found the actual number of women in receipt of HRP. Because women who returned to work straight after birth will not be entitled to HRP, we made a cautious assumption that 50 per cent stayed at home to look after their children.

We then calculated the financial impact, using published statistics on state pension benefits.

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