Pensioners were short-changed by a record £670million last year, mainly because of mistakes by officials.
New figures reveal that underpayments in State Pension reached a new high in 2022-23, up from £540million the previous financial year.
Many of those who lost out were widows who were denied extra payments they were entitled to inherit from their late spouses.
Other women received less than they deserved because civil servants got their National Insurance contributions wrong.
In total, errors by officials accounted for £580million of the underpayments with mistakes by claimants themselves making up the remaining £90million.
New figures reveal that underpayments in State Pension reached a new high in 2022-23, up from £540million the previous financial year (Stock image)
The Department for Work and Pensions admitted in a report on fraud and error in the benefits system: ‘The State Pension underpayment rate was 0.6 per cent (£670million) in FYE 2023, which was the highest recorded level, compared with 0.5 per cent (£540million) in FYE 2022.’
Former Pensions Minister Sir Steve Webb branded the figures ‘shocking’ and said: ‘Urgent action is needed to drive up standards of administration so that pensioners can have confidence that the pension they are being paid is correct.’
The DWP randomly sampled thousands of benefits claims to calculate the figures and so does not know exactly how many people were underpaid or by what amount.
Separately, however, the department has been checking hundreds of thousands of historic cases to identify and repay pensioners who were short-changed.
So far, the review has identified 173,538 historic cases where £300million was underpaid, with the average widowed pensioner some £11,521 in arrears while those in other categories are owed far less.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: ‘Government is making headway in making these repayments, but the scale of the problem is vast, and it will take time to complete but in the meantime many of these people have been under financial strain that they didn’t need to be.’
In total, errors by officials accounted for £580million of the underpayments with mistakes by claimants themselves making up the remaining £90million (Stock image)
Overall spending on the State Pension soared by £5.2billion to reach £109.7billion, out of a total £233.8billion for the total welfare system.
But fraud and error across all benefits fell slightly from £8.7billion to £8.3billion, with a marked drop in Universal Credit losses.
Work and Pensions Secretary Mel Stride said: ‘We are cracking down on fraudsters, and today’s figures show encouraging progress as DWP works to both prevent new fraudulent claims and collar cases where people have been shamelessly exploiting the system.’
Speaking to reporters yesterday, he insisted there was no need to make a decision now on when the state pension age should rise to 68.
He said the increase would likely take place in the 2040s but added: ‘It will be for somebody else to sift through the data in the next Parliament.’
‘You can wait until the first couple of years of the next Parliament to take that decision and still give people ten years’ notice of your decision and make the change at that point.’
So far, the review has identified 173,538 historic cases where £300million was underpaid, with the average widowed pensioner some £11,521 in arrears while those in other categories are owed far less (Stock image)
He also said there were no plans to alter the triple lock, the flagship Conservative policy that means state pensions increase in line with inflation, wage rises or 2.5 per cent each year.
It was controversially suspended in 2022 after the rebound from lockdown skewed earnings figures, but restored this year with pensioners seeing their retirement income rise in line with soaring inflation.
Asked if he wanted the triple lock to remain intact in the next Tory manifesto, Mr Stride said: ‘There are no plans to change the triple lock.
‘What goes into the next manifesto I don’t know, but there are certainly not any plans currently to change that.’
