State pension underpayments owed to 237,000 retirees

Pensioners on state pensions being frozen after moving overseas

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The Department for Work and Pensions (DWP) has previously admitted that there are systematic errors in state pension calculations. According to data published by the department, the department now estimates that it has underpaid 237,000 pensioners. This is over 100,000 more than was previously estimated.

It’s estimated as many as 237,000 pensioners had been undepaid around £1.46billion.

The data reveals that the Government department has only paid back around £209million of these underpayments.

The issue largely affects women retiring under the old state pension system and there are three groups the DWP has highlighted as being affected.

These include married women who should have received an upgrade to a 60 percent basic state pension when their husband retired, and widows who should have inherited an enhanced state pension when their spouse died.

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The third group are Britons over the age of 80 years who are already in receipt of a state pension when they turned 80, who should have been automatically upgraded to a 60 percent basic state pension.

Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown said: “Women retiring under the old basic state pension system are primarily affected.

“They will have had an expectation their state pension would be paid correctly and due to an overly complex system, this has not happened on a huge scale with many women enduring financial distress as a result.

“Many queried discrepancies with DWP but were told there was no issue, they will be feeling very let down and many will have died without receiving what they were entitled to.”

In January 2021 the DWP said it had begun an exercise to find the pensioners affected.

However, it has taken more time to begin than planned as the department needed to recruit and train staff for the job.

The DWP originally said it expected to complete the process by the end of 2023.

However, it now believes that the project could run on “through to late 2024”.

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Between February and October, DWP’s monthly ‘run rate’ has been around 2,000 payments per month.

According to an analysis by LCP, if this pace was upped to 3,000 cases per month, it would take another five years or more to finish the job.

By February 2022, DWP had paid out £106million to just over 15,000 people and eight months later it had paid £209million to nearly 32,000 people.

LCP highlighted this is only 13 percent of the estimated total number of people who have been affected by the underpayments and only 14 percent of the estimated money due.

LCP say the DWP has only made payments to around one in seven of those they think have lost out.

Steve Webb partner at LCP said: “The scale of these underpayments is so great that putting it right could easily end up taking four years or more from start to finish.

“It is quite shocking that well over a hundred thousand pensioners are to this day receiving the wrong rate of pension, and the DWP is clearly way behind schedule in fixing the problem.

“With cost of living pressures affecting many elderly people on low incomes, it is essential that the pace of fixing these errors is stepped up and people get the money they are due as soon as possible”.

A DWP spokesperson said: “The action we are taking now will correct historical underpayments made by successive governments. We are fully committed to addressing these errors, not identified under previous governments, as quickly as possible.

“We have set up a dedicated team and devoted significant resources towards completing this, with further resources being allocated throughout 2023 to ensure pensioners receive the support to which they’re entitled.”

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