The Department for Work and Pensions (DWP) has issued a major update regarding state pension errors which have led to thousands of people being underpaid. There are two sets of correction exercises being investigated by the DWP.
The first correction exercise relates to married women whose state pension was not automatically increased when their husband retired, widows whose state pension was not automatically reassessed, and over-80s on low state pensions. The DWP first started investigating these particular sets of errors in January 2021.
New figures released today show that £804.7million has been paid out. In total, 130,000 people were found to have been underpaid – including 50,261 people who were widowed, 47,004 married women and 33,683 over-80s on low state pension income.
The average arrears for widowed women sits at £11,725, while married women have received £5,553 back on average. The average award for over-80s is £2,203.
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The second correction exercise was launched in January 2024 and relates to mothers who were claiming Child Benefit before 2000 and may be missing Home Responsibilities Protection on their National Insurance record. This means they may not be getting the correct amount of state pension, as your entitlement depends on your National Insurance record.
HMRC has so far issued over 370,000 letters to people who may have been impacted and has processed more than 42,000 applications. Of these, 19,000 applications have been passed to the DWP, and state pension shortfalls have been found in just over 5,000 cases. The total arrears paid out so far is now £42million, with an average of £7,859 paid per person.
Sir Steve Webb, former pensions minister and LCP partner, said the latest figures show the total arrears paid out for both sets of correct exercises now totals £846million. It comes on top of an earlier correction exercise on Home Responsibilities Protection that was previously raised by Sir Steve back in 2008, which saw £83million in arrears paid to 36,000 people.
If you take this older correction exercise into account, the total now paid overall in state pension errors is £929million. The amounts paid out under the current Home Responsibilities Protection exercise are expected to rise further, with another update expected soon.
Sir Steve said: “We have become so used to stories about state pension errors that it is easy to become dulled to the scale of what went wrong. It now looks as though the total amount underpaid will pass through the £1 billion mark this year with over 170,000 people having lost out.
“The vast majority of those who lost were women, some of whom were underpaid for decades or even went to their grave never paid the right state pension. The remaining corrections need to be handled as a matter of urgency. This should never be allowed to happen again.”
Rachel Vahey, head of public policy at AJ Bell, said: “This is one of the biggest benefit scandals of modern times. DWP miscalculations have left thousands of pensioners – mainly women – short on their state pension payments. The DWP has obviously been hard at work over the last six months, identifying another 11,000 cases of underpayment, which has ratcheted the bill up from £736 million to a staggering £805 million today.
“But despite this progress, this appalling situation is not yet resolved. The DWP has confirmed they have completed the vast majority of reviews, but it will take another two years, to the end of March 2027, before all cases are resolved.“
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