Hundreds of thousands of women owed £8,900 each due to state pension underpayments dating back to 1980s
22nd September 2021

MORE than a hundred thousand women have been underpaid the State Pension dating as far back as 1985 it's been revealed.

The extent of the lost cash has been uncovered in a new report which also shows that one person was underpaid by an astonishing £128,000.

An estimated 134,000 pensioners have been underpaid the state pension and are owed over £1billion between them following errors at the Department for Work and Pensions (DWP).

According to the National Audit Office (NAO) which has investigated the problems and published a new report into underpayments, retirees have lost out on £8,900, on average.

Those affected are pensioners who first claimed the state pension before April 2016 and did not have a full national insurance record, most of them women.

They should have received increases to the basic state pension but didn't in an error that the NAO has blamed on complex rules and outdated IT systems that require claims to be made manually instead of being automated.

The DWP has started correcting the error with some pensioners paid back thousands of pounds.

But some who have since passed away and their families may never get what they are owed, the NAO says.

Around 94,000 of those who were underpaid are still alive and around 40,000 have died and payments could be made to estates.

The DWP has said that around 15,000 of those who have died, or their heirs, are unlikely to be traced, as it does not have records dating back further than four years ago.

Gareth Davies, the head of the NAO said: "The impact of the underpayment of State Pension on those pensioners affected is significant.

"It is vital that the Department for Work and Pensions corrects past underpayments and implements changes to prevent similar problems in future."

The report said that the exact amount and number of people affected is still not certain and the full extent of the errors will only be known once the DWP's review of all cases is completed.

The issue of pensioners being short changed was first identified last year by Steve Webb, the former pensions minister who is now a partner at LCP.

Mr Webb said: "This report highlights the fact that DWP failed to act over a period of many years when errors were found in state pension assessments.  

"Tens of thousands of married women, widows and the over 80s have been underpaid, with arrears in some cases exceeding £100,000. 

"It is very worrying that errors are still being made as part of the correction exercise, where the highest standards of quality control should be in force. 

"DWP also needs to do everything it can to track down the families of pensioners who have sadly died and never received the pension they were due. 

The DWP is working through identifying those affected and has brought in extra staff to help identify and correct the errors.

It expects to have paid back the money owed by the end of 2023.

A DWP spokesperson said: "We are fully committed to ensuring the historical errors that have been made by successive Governments are corrected, and as this report acknowledges, we’re dedicating significant resource to doing so. Anyone impacted will be contacted by us to ensure they receive all that they are owed.

"Since we became aware of this issue, we have introduced new quality control processes and improved training to help ensure this does not happen again.”

Who is affected by state pension underpayments?

Around 130,000 retired, stay-at- home mums may have missed out on a pension hike when their husbands retired.

Their payments should have risen to 60% of their husband’s basic state pension, the amount women with low national insurance contributions got under the old pension system.

In the previous tax year when the issue was first uncovered, they would get £80.45 a week, 60% of their husband’s £134.25 a week. Instead, they are getting more like £67 a week.

The injustice only affects wives who retired before 2016, since after that the system changed so women’s pensions were no longer linked to their husbands.

How much you’ll get in compensation depends on when your husband retired. If it was between April 2008 and 2016, you’ll get all your losses back as the Government should have increased your pension automatically.

Those whose husbands retired before 2008 had to apply for the extra cash, although in many cases they lost out because they didn’t know about it. Women in this position can only get a year of backdated payments.

This online tool was launched last year by former pensions minister Steve Webb on behalf of actuarial firm LCP, after he first uncovered cases of women being paid the wrong state pension via his This Is Money column.

If you use the LCP calculator and think you're eligible for a top-up in either scenario, then the DWP should pick up the error in their own records too.

The DWP started working to fix the problem on January, 11 2021 and says it expects to make repayments by the end of 2023.

If you are owed money, you will have to sit tight and wait for the DWP to send you a letter confirming your payment.

Those considered at "high risk" like those over 80 and widows are being prioritised.

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