Approximately one million people, predominantly women, will receive official correspondence from HM Revenue and Customs (HMRC) over the coming months detailing their eligibility for pension top-up payments. This is a genuine government initiative, not a fraudulent scheme, and recipients need not take any action to apply.
Those entitled are individuals on modest incomes who have inadvertently forfeited tax relief on their pension contributions due to the administrative structure of their workplace pension scheme. The typical payment will be around £70, though amounts vary considerably based on individual circumstances. According to financial guidance sources, the average payment may be closer to £53, with approximately three-quarters of those affected being women.
Why are some people receiving these payments?
When individuals contribute to a workplace pension, the government permits a portion of what would otherwise be collected as income tax to be redirected towards pension savings. This mechanism is called tax relief.
A structural disparity exists between two types of pension administration. Employees whose pensions operate under a Net Pay Arrangement scheme have received less tax relief than those in a Relief at Source scheme, particularly when earning below the income tax threshold. Since workers have no say in which scheme their employer uses, the government has determined that those who missed out should receive compensation through what is formally termed a low earner's pension payment.
Eligibility typically applies to individuals who earned close to, but not exceeding, £12,570 annually—the point at which income tax liability begins. According to HMRC's official guidance, the top-up is designed to equal the tax relief that would have been received in a Relief at Source scheme, usually representing 20 per cent of the gross pension contribution.
The initiative addresses what was previously referred to as the "low earner's anomaly" before the government adopted the term "low earner's pension payment." HMRC will assess eligibility for each tax year separately, beginning with the 2024-25 tax year, with automated payments subsequently applying to subsequent years.
How can recipients verify the letter is genuine?
No application is required from eligible individuals. Those who qualify will receive notification from HMRC either by post or through their online Personal Tax Account.
A critical safeguard: HMRC will never contact people via text message, email, or telephone regarding this payment. Any such communication is fraudulent. Legitimate HMRC contact will never request money transfers, PIN codes, or passwords.
To confirm a letter's authenticity, recipients should:
Verify that HMRC holds their current address on file; visit Gov.uk and search for "check if a letter you've received from HMRC is genuine," then locate the "Low Earner's Pension Payment" section; and review HMRC's published guidance on identifying scams.
Those who wish to accept the payment will be asked to supply their bank details through their Personal Tax Account. Individuals without digital access can telephone HMRC to provide their details instead.
An HMRC spokesperson stated:
"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. Customers can check a letter is genuine on Gov.uk and should only respond via official HMRC channels."
What is the timeline for payments?
According to pension-scheme guidance, HMRC will contact around one million eligible people directly beginning in August 2026, rather than requiring them to initiate contact. The rollout will be phased across the remainder of 2026 and into early 2027, with payments for the 2024-25 tax year commencing first. Some reporting indicates that first-wave payments for the 2024-25 tax year could be completed by the end of 2026.
Employers and payroll teams bear no responsibility for applying, assessing eligibility, amending payroll records, or contacting HMRC on behalf of employees. The entire process is managed centrally by HMRC.
Will everyone eligible actually receive their payment?
Sir Steve Webb, partner at pensions consultancy LCP and former pensions minister, has expressed concern about the uptake rate. He observed that the government's cost projections for the scheme are substantially lower than they would be if all eligible individuals claimed their entitlements, suggesting significant numbers may not receive what they are owed.
"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. It is vital that communications are effective to make sure that people get the money to which they are entitled."
HMRC has committed to running an awareness campaign utilising social media and other communication channels to reach eligible recipients and encourage them to claim their payments.
Key Facts
- Approximately one million people will receive letters from HMRC starting in August 2026 about pension top-up payments they do not need to apply for
- Typical payments are around £70, though amounts vary; the average may be closer to £53 depending on contributions and affected years
- HMRC will never contact eligible people by text, email, or phone—any such contact is a scam
- Recipients must provide bank details through their Personal Tax Account to receive payment, or can telephone HMRC if digitally excluded
- The scheme addresses a structural disadvantage affecting low earners in Net Pay Arrangement pension schemes who missed out on tax relief compared to those in Relief at Source schemes
