TENS of thousands of pensioners have received a total of £497million after being previously underpaid.
Fresh figures released today have revealed that over 82,323 retirees have had payments returned after an error resulted in £1.46billion being underpaid.
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The scale of the error left over 237,000 pensioners underpaid, according to the Department for Work and Pensions (DWP).
The DWP has released the latest figures for its progress in setting things right – but thousands are still owed money back.
Steve Webb, former pensions minister and now partner at LCP said: “DWP still has a mountain to climb when it comes to paying all pensioners the amount they are due.
“It is a sorry chapter in the history of the Department when well over 1,000 civil servants have had to spend years painstakingly fixing state pension errors which should have been picked up much sooner.”
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Mr Webb also said it was a “tragedy” that tens of thousands of elderly women have died without ever receiving the money they were due.
Women retiring under the old state pension system are those mainly affected.
“It is vital that the process of fixing these errors continues to accelerate and that measures are taken to prevent the reoccurrence of such large-scale underpayments,” Mr Webb added.
Of the 173, 538 accounts checked between January 11, 2021 and October 31, 2023, exactly 82,323 underpayments were identified.
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This means that £497million in state pension underpayments was owed back.
It included 37,488 married pensioners who received an average of £5,931 each.
More than 26,940 over 80s got an average of £2,245 each.
And a total of 17,894 widowed retirees were paid out an average of £12,383 per person.
This compares with a total of £324million paid out to just over 50,000 pensioners as of the end of March 2023, as reported in the DWP’s latest annual report.
The final total amount due to be paid as a result of this error is £1.17billion to around 170,000 pensioners, according to the DWP.
Shockingly, some of the underpayments go as far back as 1985.
Those affected by the error are pensioners who first claimed the state pension before April 2016.
These retirees were unlikely to have a full National Insurance record.
They should have received increases to the basic state pension but didn’t due to an error that the National Audit Office has blamed on complex rules and outdated IT systems that require claims to be made manually instead of being automated.
But some have since passed away and their families may never get what they are owed.
The DWP has been contacting those affected by the errors, mostly women who are widowed, divorced or who have some of their entitlement based on their husband’s pension contributions.
But many people could still be missing out on significant sums because there’s little guidance for those concerned they are being underpaid their state pension.
As well as the millions still to be paid out to widows in particular, the latest DWP annual report also owned up to a further £1billion in underpayments being owed to around 187,000 parents.
This arises from errors in recording Home Responsibilities Protection (HRP) for time at home with children on large numbers of National Insurance records.
The error, which was first revealed last year, has seen an estimated 187,000 people, miss out on money they are entitled to during retirement – most of them women who were stay-at-home mums.
Although HMRC has recently started a programme of writing to those who have potentially missed out on HRP, very few of those who have missed out have so far received what they’re owed.
It’s likely to take several years to reach all of those affected by this separate error.
Mr Webb said: “The process of correcting state pension errors began nearly three years ago but still only around half of the money owed has been paid.
“Worse still, when DWP recently decided to do the first proper checks on state pensions in years, they identified another £1billion in underpayments and work has barely begun on fixing those errors.”
Who is affected by state pension underpayments?
Around 237,000 retired stay-at-home mums may have missed out on a pension hike when their husbands retired.
Their payments should have risen to 60% of their husband’s basic state pension, the amount women with low National Insurance contributions got under the old pension system.
In the previous tax year when the issue was first uncovered, they would get £80.45 a week, 60% of their husband’s £134.25 a week.
Instead, they are getting more like £67 a week.
The injustice only affects wives who retired before 2016. After this date, women’s pensions were no longer linked to their husbands.
How much you’ll get in compensation depends on when your husband retired.
If it was between April 2008 and 2016, you’ll get all your losses back as the Government should have increased your pension automatically.
Those whose husbands retired before 2008 had to apply for the extra cash, although in many cases they lost out because they didn’t know about it.
Women in this position can only get a year of backdated payments.
What can I do about it?
Pensioners can’t go directly to the DWP and query whether they have been affected but there are some online tools and advice sites out there to help give you some clues.
An online tool launched by former pensions minister Steve Webb on behalf of actuarial firm LCP can help married women check if they might be affected.
If you use the LCP calculator and think you’re eligible for a top-up in either scenario, then the DWP should pick up the error in their own records too.
The DWP started working to fix the problem on January 11, 2021, and said that it expects to make repayments in the coming months.
If you are owed money, you’ll likely have to sit tight and wait for the DWP to send you a letter confirming your payment.
Those considered at “high risk” like those over 80 and widows are being prioritised.
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Meanwhile, millions of grandparents are set to benefit from a bumper pay rise next year.
Plus, thousands of pensioners have just weeks left to claim an extra £201 a week and a one-off £300 direct payment.
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