MPs press DWP over potentially underpaid state pensions to divorcees
The DWP is being urged to investigate whether divorcees have potentially received underpaid state pensions
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MPs pressed the Department for Work and Pensions (DWP) last night over concerns regarding potentially underpaid state pensions affecting some divorcees.
An expert wrote to the Public Accounts Committee pointing out that there seemed to be a significant number of divorced women with low state pensions.
He said this has raised questions about whether the rules in place to help such women were working effectively.
Commenting on his findings, Steve Webb, partner at consultants LCP said: “Given the massive scale of errors on state pensions for married women, widows and the over 80s, it is stretching belief to think that divorced people’s pensions have all been worked out perfectly.”
The latest letter, which refers to evidence supplied by Webb also questions the position of some divorced men who may also lose out from any failures in the system.
Under the old state pension system there were two main ways in which a divorced woman could benefit from her ex husband’s contributions
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Under the old state pension system (for those who reached pension age before 2016) there were two main ways in which a divorced woman could benefit from her ex husband’s contributions:
1.Where a woman divorced and did not remarry before pension age, her state pension at retirement could take account of her ex husband’s contributions up to the date of their divorce; where his NI record was better than hers, she could ‘substitute’ his record for that period; provided that the woman gave full details of her ex husband at retirement this calculation should be done automatically;
2.Where a woman divorced after retirement, and notified DWP, DWP should then reassess her state pension, taking account of her ex husband’s contributions right up to her retirement. In many cases this would entitle her to a full basic state pension.
It is the second group where there is the most potential for underpayments. The current mass correction exercise relates to errors where something changed post retirement (eg a woman’s husband retired or her husband died or she turned 80) and DWP failed to do a reassessment.
As underpayments are currently being rectified, Web explained it would not be a total surprise if the same had happened in some divorce cases.
He continued: “A particular issue is cases where DWP was notified of a divorce post-retirement and whether this always resulted in a state pension reassessment.
“For any given individual the difference could be very substantial, especially where a woman had a poor NI record but her ex husband had a full record. DWP should do a thorough search for potential errors of this sort”.
When being assessed for state pension, men have been able to substitute the contributions of an ex-wife since 1979.
As most men get a full basic pension in their own right, it is rare that they have been underpaid.
However, there could be individual cases where a man needed to use his ex-wife’s contributions and this was not done correctly.
The DWP initially said that they had “no evidence of systemic error due to missing action taking on notifications of divorce” but the Committee is asking them to review the decision not to check further for such cases.
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A DWP spokesperson said: “We encourage people to contact us if they get divorced or their civil partnership is dissolved and every year, we remind people about doing so alongside the uprating notifications we send out.
“We are considering the letter from the Chair of the Work and Pensions Select Committee and will respond in due course.”
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