- The government has now identified over £300 million in state pension underpayments between 11 January 2021 and 28 February 2023 (State Pension underpayments: progress on cases reviewed to 28 February 2023 - GOV.UK (www.gov.uk))
- More than 46,000 of underpayments have been located during the period, worth around £6,400 each on average
- An official report by the National Audit Office published last year suggested 134,000 pensioners had been underpaid over £1 billion (Investigation into underpayment of State Pension - National Audit Office (NAO) report)
- The NAO estimated the average repayment to those people the DWP could trace would be £8,900
- Administration errors over decades by the DWP which led to people being underpaid their state pension have previously been labelled a “shameful shambles” by MPs (“Shameful shambles” of DWP’s long term underpayment of state pensioners with “little interest” in full consequences - Committees - UK Parliament)
Tom Selby, head of retirement policy at AJ Bell, comments:
“While it is clearly positive the government has identified over £300 million of state pension underpayments, this is still a long way short of the £1 billion the National Audit Office estimates is owed to pensioners.
“This saga is particularly tragic as many of the people affected will have been struggling unnecessarily for years. What’s more, the NAO estimated around 40,000 of the people who were due a repayment had died without receiving it.
“It is absolutely critical all those affected by this scandal receive the money they are owed as quickly and efficiently as possible.
“With many retirees struggling to make ends meet as inflation eats away at their living standards, a cash windfall worth thousands of pounds could prove a lifeline after years surviving on an artificially low income due to the DWP’s errors.
“Once compensation has been paid, the government needs to undertake a comprehensive review of its processes to ensure these mistakes are never repeated.
“Trust in pensions is fragile at the best of times and failures such as this will not help. Sadly, it will likely take years, if not decades, to rebuild the confidence lost as a result of this scandal.”
Background
The scandal of state pension underpayments relates to those who should have been entitled to uplifts under the pre-2016 system, but due to administrative errors did not receive them. These errors have been found to date back as far as 1985.
The main people likely to have been underpaid their state pension include:
- ‘Category BL’ pensioners: pensioners who are receiving a low basic state pension in their own right, but are entitled to increase it using their living spouse or civil partner’s contributions once their partner becomes entitled to state pension;
- ‘Widowed pensioners’: widows and widowers who are not entitled to a full basic state pension based on their own contributions can inherit a basic state pension from their spouse or civil partner up to the full basic state pension rate;
- ‘Category D’ pensioners: men and women previously receiving no or low amounts of basic state pension, who may be able to increase their state pension from age 80.
