Pensioners could find their income hit

The Revenue issued the warning after it failed to send out reminders over the last five years to people who needed to top up their pensions.

It could mean some people are facing up to �1,500 in extra contributions to qualify for a full state pension.

Many of those affected who are close to retirement age are likely to find their weekly pension will be lower than �77.45 they may have expected.

But the Revenue dismissed the story and said only about 4% of workers usually top up their national insurance contributions and no-one will be out of pocket.

It is frankly breathtaking that the Inland Revenue is going to have to issue 10m letters because of a computer blunder Steve Webb, Liberal Democrat pensions spokesman Q&A: Pensions computer error

In a statement, the Revenue denied it had made a computer error.

It said it had made a decision to suspend some "deficiency notices to concentrate on core work".

But admitted the problem had been caused when the new National Insurance system was introduced.

"There were problems with the transfer, so non essential business was suspended to give priority to ensuring current benefit and pension claims could be dealt with."

Not on track

Reminders are normally sent out to those workers who fall short of the minimum �4,625 per annum income necessary to contribute a full year's National Insurance contributions.

In order to qualify for a full state pension, an individual must satisfy strict procedures.

Te full contribution needs to be paid for a continuous period of at least 45 years to qualify for the full amount.

The problems - originally reported by BBC Radio 4's Money Box programme - mean that for the tax years 1997 to 2001, no reminders were sent out.

The Revenue insisted that no-one would lose out, and said it would give those affected an extra five years to pay off any shortfall.

Security scare

A surprising number of people do not get the full state pension.

According to figures from the Department for Work and Pensions only 65% of people get the full state pension.

Women on average receive only �59.45 a week, far short of the maximum �77.45 individual payment.

The shortfalls are due to a variety of factors, such as strict qualifying conditions - and specific issues such as the married women's stamp.

This means many women who are currently retired or approaching retirement are not receiving pensions in their own right.

No loss

The Revenue said it would start writing to people later on in the year to let them know of any gaps in their records since the last time the notices were issued.

People affected will have up to 2008 to make payments, it said.

This means that people who have a broken payment record can make up the shortfall.

Computer problems

The Revenue has suffered a number of embarrassing computer problems in recent years.

Last year, its online filing system was hit by a security scare when some users were able to access other people's details online.

And last September it had to contact 42,000 self-employed people to ask for National Insurance contributions it failed to collect in 1998.

Steve Webb, the Liberal Democrat pensions spokesman, told the Daily Telegraph newspaper an inquiry needed to be launched into the latest problems.

He told the paper: "It is frankly breathtaking that the Inland Revenue is going to have to issue 10m letters because of a computer blunder.