Around one million low earners are set to be contacted by HMRC inviting them to claim missed pension tax relief top-up payments, although LCP partner, Steve Webb, has warned there could be "huge non-take-up” because many recipients may be unaware of the issue or mistake the letters for a scam.

The low earner’s pension payment campaign is aimed to correct an anomaly that penalised some pension savers because of their low earnings and the way their pension scheme administered tax relief.

The issue relates to low earners in workplace pension schemes that use the Net Pay Arrangement (NPA) method rather than Relief at Source (RAS) approach, meaning some miss out on pension tax relief if they do not pay income tax.

From the 2024/25 tax year, affected savers will be able to claim a top-up payment from HMRC to address the issue.

However, Webb has warned the campaign may fail to reach some people affected by the anomaly.

“It is clearly unfair that around 1 million low earners have missed out on pension tax relief, simply because of the way in which their workplace pension is administered," he continued.

“But 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.

“Most people will not have a clue about this issue and may be suspicious of a letter out of the blue from HMRC offering them free money. Some may suspect it is a scam.”

He added: “It is vital that communications are effective to make sure that people get the money to which they are entitled.”

HMRC said payments for contributions made in 2024/25 will begin in the coming months through a phased approach, gradually expanding the rollout over the remainder of the year and into early 2027.

It added that eligible individuals will be contacted directly by post, and that employers, payroll teams and pension scheme administrators do not need to act.

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