Martin Lewis discusses state pension underpayments
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State pension underpayments have become a hot topic for retirees in recent months as the DWP assured it would rectify the issue. In March, the OBR broke down how some women in certain working arrangements and relationship statuses saw their state pensions underpaid by thousands.
The OBR detailed at the time: “DWP has also identified underpayments of state pension relating to entitlements for certain married people, widows and over-80s back to 1992.
“Our forecast reflects an initial estimate that it will cost around £3billion over the six years to 2025-26 to address these underpayments, with costs peaking at £0.7billion in 2021-22.”
Women who could be affected by this may have been underpaid if the following applied:
- They are a married woman over state pension age who reached pension age before April 6, 2016
- Their husband is over state pension age
- Their basic state pension is less than 60 percent of his basic amount
Additionally, underpayment issues were addressed once again in April.
Under the old state pension rules, which were in place up until 2016, married women were allowed to claim a basic state pension at 60 percent of the full rate.
This was based on the National Insurance contributions of their husbands but it was only permitted where the sum was bigger than the state pension a woman would have received based on their own National Insurance record.
A state pension uplift was meant to be automatically applied in 2008 but in some circumstances, a number of women were not automatically increased due to a system error.
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In light of these problems, women are being encouraged to contact DWP to get what they’re owed with Sir Steve Webb, former pensions minister and partner at LCP, detailing these payouts from the Government could hit the £100million mark.
On this problem, the DWP has assured people it is making efforts to correct the mistake, as Guy Opperman, the Pensions Minister, confirmed to MPs: “What we’re dealing with here is a junior civil servant at the DWP, who at some stage sometime 12 to 20 years ago failed to update a particular entitlement of a particular person.
“Not everybody, in fact, we’re clear it’s definitely not the majority, but some individual claims have not been manually uprated by an individual working in a pension centre.”
A DWP spokesperson also said: “We are aware of a number of cases where individuals have been underpaid state pension.
“We corrected our records and reimbursed those affected as soon as errors were identified.
“We are checking for further cases, and if any are found awards will also be reviewed and any arrears paid.”
Many people may be planning to contact the DWP over the bank holiday weekend with the extra time they have but this could prove to be problematic.
The DWP office is closed on Saturdays and Sundays and the Government department recently confirmed it will be affected by the upcoming bank holiday.
Today is the last day the DWP will remain open, with offices and phone lines not reopening until Tuesday, June 1.
On top of contacting the DWP, people can get a state pension forecast ahead of retiring through the Government’s website.
The Government has a free-to-use tool which allows users to find out how much state pension they could get, when they can get it and how it can be increased.
Additionally, for those who are reaching their state pension age in more than 30 days, a BR19 application form can be completed or the Future Pension Centre can be called, who will then post a forecast out.
State pensions can only be claimed from the age of 66 going forward and in the coming years, the state pension age will rise to 68.
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