Low Earner Pension Payment: HMRC Letters and What You Need to Do

HMRC is writing to around 1 million people to offer a new payment that corrects a long‑standing issue affecting low earners in certain workplace pension schemes. If you receive a letter, you may be entitled to a cash top‑up on your pension contributions.

1. What is the Low Earner’s Pension Payment?

Some workplace pensions use a method called the Net Pay Arrangement (NPA). Under NPA, pension contributions are taken from your pay before tax is calculated. This works well for taxpayers — but non‑taxpayers miss out on tax relief entirely.

From 2024/25 onwards, HMRC will pay eligible low earners a top‑up to correct this unfairness.

2. Who is affected?

You may be eligible if:

• You earned below the £12,570 personal allowance

• You were auto‑enrolled into a workplace pension

• Your employer’s scheme uses the Net Pay Arrangement (NPA)

• You made pension contributions in 2024/25 or later

Around 1 million people are affected, and three‑quarters are women, often in part‑time roles.

3. How much will you receive?

HMRC estimates an average payment of around £53, but your exact amount depends on:

• How much you contributed to your pension

• How many years you were affected

Payments are made year by year.

4. How the process works

Step 1 — HMRC contacts you

Letters are being issued from late 2026 into early 2027. You don’t need to apply until HMRC invites you.

Step 2 — You submit a claim for 2024/25

The first year requires an active claim.

Step 3 — Future years become automatic

Once registered, HMRC will process later years without further action.

Step 4 — Payment issued

HMRC expects payments to start flowing within months of claims being received.

5. Why this payment exists

There are two pension tax‑relief systems:

Auto‑enrolment allows people earning just over £10,000 to join a pension even if they don’t pay tax. If their employer uses NPA, they lose out — through no fault of their own.

The new payment fixes this.

6. Important: Watch out for scams

Because HMRC is writing to people about money they are owed, some may assume the letter is fraudulent.

HMRC will never:

• Ask for bank details by text or email

• Request passwords, PINs, or transfers

• Send links to claim forms via SMS

You can verify any HMRC letter using GOV.UK’s “Check a letter is genuine” service.

7. FAQs

Do I need to apply now? No — wait for HMRC to contact you.

What if I threw the letter away? HMRC will send reminders and follow‑up communications.

Will this affect my pension or tax position? No. It is a separate payment, not a change to your pension pot.

Can I check whether my employer uses NPA? Yes — ask your employer or pension provider.

Is this payment taxable? No — it is a correction for missed tax relief.

8. Key message for you

If you receive a letter from HMRC about the Low Earner’s Pension Payment, don’t ignore it. It is a genuine opportunity to claim money you should have received automatically.