Around one million lower earners are expected to receive letters from HMRC about a pension top-up worth about £70 on average for the 2024/25 tax year, according to MoneySavingExpert.
The payment is designed to fix an anomaly that affected people saving through some workplace pensions. It is not a new state pension bonus and it is not a normal income-tax refund. It is a direct payment intended to put low earners in ‘net pay’ pension arrangements on a more equal footing with savers whose schemes use ‘relief at source’.
The difference comes down to how tax relief is delivered. In a relief-at-source scheme, a pension provider claims basic-rate relief from the government and adds it to the contribution. A person can benefit even if their income is below the personal allowance and they pay no income tax.
In a net pay scheme, the employer deducts the pension contribution before calculating income tax. That means taxpayers receive relief automatically because they are taxed on a lower amount of pay. But if someone earns too little to pay income tax, there is no tax bill to reduce. Until the new correction, that could leave the lowest earners worse off simply because of the pension arrangement chosen by their employer.
HMRC’s low earner’s pension payment applies from the 2024/25 tax year onward. Eligibility is assessed separately each year. Government estimates suggest about 1.32 million people could qualify, and roughly 75% of the affected group are women.
The average 2024/25 payment is expected to be around £70, although individual amounts vary. People who only missed part of the available relief can receive a partial top-up. The money is paid to the person rather than directly into the pension pot, so recipients can decide what to do with it.
The practical issue is making sure a genuine HMRC payment does not become an opportunity for fraudsters. MoneySavingExpert says eligible people will receive a letter from HMRC between late 2026 and early 2027 and may also see a message in their Personal Tax Account.
Recipients will need to provide bank details for the transfer. Those details should only be entered through the official Personal Tax Account or supplied using the verified telephone route described in the genuine HMRC letter. The report says HMRC will not contact people about this payment through an unsolicited text, email or phone call.
That distinction is important because a message promising an unexpected £70 refund is exactly the sort of low-value, believable lure that can persuade people to click a fake link. A genuine payment does not require sending passwords, PINs or money to ‘release’ funds.
People who receive a letter should also check which workplace pension arrangement they were in during 2024/25. Their employer or pension provider can explain whether the scheme uses net pay or relief at source. The correction applies to the net-pay anomaly, not to every person earning below the personal allowance.
The sums may look modest, but the policy addresses a structural fairness issue. Pension saving is cumulative, and lower-paid workers are already more likely to have smaller retirement pots. A tax system that accidentally gives them less support because of an administrative mechanism can deepen that gap.
HMRC will assess future tax years separately. For those contacted about 2024/25, the immediate task is simpler: verify the letter independently, use official channels and claim the payment without handing a scammer the bank details meant for HMRC.