DWP still owes £1billion in ‘underpaid’ state pension payments: ‘Long way to go'
As many as 237,000 people are estimated to be affected, underpaid by around £1.46billion in total
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Tens of thousands of people who received an underpaid state pension due to historic errors are still owed money from the government.
The Department for Work and Pensions (DWP) has paid back £571.6million in state pension underpayments between January 11, 2021, and February 29, 2024, but it’s estimated the DWP could still need to pay out around £1billion.
A new update on the progress of the State Pension Underpayments Legal Entitlements and Administrative Practice (LEAP) exercise showed 97,016 underpayments have been identified so far.
As many as 237,000 people are estimated to be affected, underpaid by around £1.46billion in total, with an average payout around £5,900.
Those affected include many women retiring under the old state pension system.
Many did not receive the state pension they were entitled to under their husband’s National Insurance record and others did not get uplifts they were entitled to when their husbands died.
There were four main groups of older people who were mainly affected by the errors made by the DWP errors
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Commenting on the update Helen Morrissey, head of retirement analysis at Hargreaves Lansdown said: “This very slow. Just over £571million has been returned so far but with estimates suggesting the scale of underpayments could be around £1.5billion there’s still a very long way to go.
“People have the expectation that the state pension they receive is correct but a series of errors in an already overly complicated system means that for many thousands of people this expectation has been incorrect.
“Some who queried the issue with DWP over the years were told there was no problem, and many have suffered real financial hardship as a result.
“These people have been let down and need resolution as soon as possible.”
In 2020, the DWP became aware of a number of individuals who had not had their state pension increased, in accordance with the law, automatically when this should have happened.
This prompted the Department to take action to investigate the extent of the problem. However, it's important to note that most of the 12.7 million people receiving the state pension are being paid the right amount of money.
There were four main groups of older people who were mainly affected by the errors made by the DWP.
This includes married women (category BL), people in a civil partnership, widows and those over 80 (category D).
These case reviews were due to be completed before the end of 2023 and were reportedly “on track” to be corrected by the end of this year.
Progress made between January 11, 2021 and February 29, 2024:
Married (Cat BL)
- Cases reviewed: 317,955
- Underpayments identified: 43,367
- Average arrears: £5,713
- Total amount repaid: £243.8million
Widowed (Cat B)
- Cases reviewed: 298.099
- Underpayments identified: 21,175
- Average arrears: £12,486
- Total amount repaid: £262million
Over 80 (Cat D)
- Cases reviewed: 89,634
- Underpayments identified: 32,474
- Average arrears: £2,192
- Total amount repaid: £65.5million
Progress on the state pension LEAP exercise is based on DWP management information supplied through:
- individually reviewed cases to find customers that have been underpaid and the amount they are owed, and to learn why they have been underpaid
- the department’s computer system that holds alive and deceased state pension cases
The chair of the Public Accounts Committee of MPs, Dame Meg Hillier, has accused the Government of being “asleep at the switch” in the way it handled pension underpayments.
In December 2023, the committee said it was “very concerned that DWP reports yet another historic underpayment of state pension, which it estimates may have left some 210,000 pensioners out of pocket by a total of £1.3billion”, going back decades.
Tom Selby, director of public policy at AJ Bell, said that the National Audit Office “previously estimated that around 40,000 of the people who were due a repayment had died without receiving it”.
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He added: “This saga is particularly tragic as many of the people affected will have been struggling unnecessarily for years.
“It is absolutely critical all those affected by this scandal receive the money they are owed as quickly and efficiently as possible.”
A DWP spokesperson said: “The action we are taking now is correcting historical underpayments made by successive governments.
“Our priority is ensuring pensioners receive the financial support to which they are entitled and we have set up a dedicated team and devoted significant resources towards completing the correction exercise.”
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