Thousands of state pensioners could be owed up to £60k – were you underpaid?

Thérèse Coffey addresses state pension underpayments

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The Department for Work and Pensions (DWP) estimates that it underpaid 134,000 older people in a new report. Those it can trace will be paid an average of £8,900, the National Audit Office (NAO) said.

DWP said that between January 11, 2021 and September 30, 2021, they had identified 9,491 underpayments, with claimants owed a total of £60.8 million.

Sir Steve Webb, a former Liberal Democrat pensions minister who is now a partner at LCP (Lane Clark & Peacock), said several more cases of underpayments had emerged, including some amounting to up to £60,000.

One case he had was of a woman who was divorced when she retired, and she was told she had no state pension entitlement.

When she recently made a claim, it was accepted she was entitled to over £140 per week and she was made a back payment of over £60,000.

These are:
“Women (and some men) who were divorced at pension age but whose pension was not assessed on the basis of their ex-spouse’s contributions.

“[And] women (and some men) who divorced post pension age and notified DWP of this fact, but where their pension was not reassessed on the basis of their ex-spouse’s contributions.”

Problems with underpayments came to light when Sir Webb, along with This is Money, brought individual cases to the DWP’s attention – and Sir Webb said he believed the “systemic” problems originally found may also exist for some divorced women.

He continued: “If the Department accepts that a failure to act on a change in circumstances can cause widows and others to be underpaid, why not accept that divorced women could be missing out for exactly the same reason?”

Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown urged anyone who thinks they may have been affected to make sure they get their money back.

“If you think you may have been underpaid you should contact the DWP.

“Women on less than £82 per week who are, or were, married to men who have a full National Insurance record and started receiving their state pension before March 2008 should get in touch.”

The DWP is currently going through the data to track these people down and so far it has rectified thousands of cases.

However, women who were married to a man with a full National Insurance record and got their state pension before March 2008 should check to see whether they have been underpaid.

The money can be repaid if a person gets in touch with the DWP to discuss their individual circumstances.

A DWP spokesperson said: “We encourage people to contact us if they get divorced or their civil partnership is dissolved and every year we remind people about doing so alongside the uprating notifications we send out.

“We want everyone to claim the benefits to which they may be entitled and we urge anyone of state pension age – or their family and friends – to check if they are missing out on financial support.

“We apologise for the errors in the cases identified and have corrected our records and paid the arrears owed.”

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