A newly released report by the National Audit Office (NAO) has revealed that approximately 237,000 people of State Pension age have been collectively underpaid £1.46 billion by the Department for Work and Pensions (DWP).
According to the report by the public spending watchdog, this is a rise of £429 million and around 105,000 claimants from the DWP's 2020-21 estimate.
The report, which was overseen by Comptroller and Auditor General of the NAO Gareth Davies, reveals that some underpayments date back as far as 1985. It also states that the DWP has determined multiple categories of pensioner that could have been affected by underpayments.
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The most significant of these relates to Home Responsibilities Protection (HRP), a scheme intended to help safeguard parents and carers’ State Pension credits. It was replaced by National Insurance credits in 2010, but these cases were reportedly not recorded accurately on National Insurance records.
As reported by the Daily Record, the DWP is working alongside HMRC to learn more about the cases of underpayment, including the possible causes and how to correct them. These newly discovered mistakes are the primary cause of the State Pension underpayment rate rising from 0.3% to 0.5%.
Former pensions minister Sir Steve Webb first brought to light the State Pensions underpayments whilst working with This Is Money. Taking to social media, he stated that he highlighted the HRP issues 14 years prior.
He tweeted: “DWP also admit that there are errors on missing 'home responsibilities protection' (credits for parents at home with kids). I first raised this with them in 2008 and they did a correct exercise, but a decade later there are still big errors.”
According to the NAO, the rise in the number of underpayments is due to the DWP undertaking computerised analyses of its data in order to identify cases needing reviewing.
The UK Government department has finished conducting all of these scans, but the full number of underpayments will not be known until after it has finished reviewing every case. The DWP's current estimate after payments made up to March 31 2022, is £1.35 billion.
The DWP said that it hoped to finish its State Pension underpayment review by the end of next year. However, it recently informed the Work and Pensions Committee that it will likely finish reviewing cases of people over 80 by next spring.
It also stated that it intends to increase the number of employees working on case reviews from 500 to 1,500 in order to ensure the task is completed by next December. However, the NAO stated that on current assessments, review and correction of all widowed pensioner cases not be completed until the end of 2024.
It commented: "A delay of this length would increase the total amount underpaid to pensioners by an estimated £14 million."
The UK Government department began the Legal Entitlements and Administrative Practice (LEAP) program at the start of 2021 to identify and correct State Pension cases where people were being underpaid.
Who may be due back payments for State Pension?
There are six groups of State Pension claimants in particular — all women — that have been urged to get in touch with the pension service to see if they are due money. These are:
- Married women whose husband turned 65 before March 17, 2008 and who have never claimed an uplift to the 60% rate
- Widows whose pension was not upped after their husband passed away
- Widows whose pension is now correct, but who believe they might have been underpaid while their late husband was still alive, especially if he reached the age of 65 after March 17, 2008
- Over-80s who are receiving a basic State Pension of less than £80.45
- Widowers and heirs of married women , where the woman has now died but was underpaid state pension during her lifetime
- Divorced women , especially those who divorced after retirement, to check that they are benefiting from the contributions of their ex-husband
Permanent Secretary at DWP Peter Schofield said: “If anyone in any circumstance not covered by the LEAP exercise thinks that there is potentially an issue, they should get in touch with us.”
How to check if you are affected or make a claim
If you want to check whether you are due money back the easiest way is to call the pension service. They can be reached at 0800 731 0469, while full contact details can be found here.
A DWP spokesperson stated: "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 2022 and 2023 towards the underpayments exercise."
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