New figures have been released by the Department for Work and Pensions showing that tens of thousands of state pensioners have been identified as having underpayments.
The figures show that 46,716 state pensioners have been identified by the DWP as being underpaid to the state pension. A total of £300.1 million has been paid by the DWP to the people who have been affected - this is the equivalent to about £6,424 per case.
In November last year, the amount of people identified as having underpayments was 31,817 people as having been underpaid. Since then it has increased by more than 10,000.
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However, many more could still be affected as it's estimated that as many as 237,000 pensioners were underpaid, reports the Mirror. The National Audit Office (NAO) has predicted that about £1.46 billion had not been paid in state pensions.
Commenting on the DWP's release, Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: “The DWP is making progress in dealing with state pension underpayments but there’s a mountain still to climb.
"However, with estimates suggesting as many as 237,000 pensioners have been underpaid £1.46billion it is clear this is a situation that is not going to be resolved any time soon and in the meantime, thousands of pensioners are getting less than what they are entitled to."
Women who are retiring under the old state pension system, before April 2016, are among those who are mostly affected by the underpayments. A number of the errors have been found to date back as far as 1985.
The main three groups of people being underpaid are:
- Married women, who should have received an upgrade to a 60% basic state pension when their husband retired
- Widows (and widowers) who should have inherited an enhanced state pension when their spouse died
- Over 80s already getting a state pension when they turned 80, who should have been automatically upgraded to a 60% basic state pension
The DWP's release showed that 22,276 married pensioners received an average of £6,630 each, in a total payout of £147 million.
There were 14,512 over-80s that got an average of £2,710, totalling £39 million, and 9,928 widowed pensioners were paid out an average of £11,521 each in a £113 million payout.
Tom Selby, head of retirement policy at AJ Bell said: “With many retirees struggling to make ends meet as inflation eats away at their living standards, a cash windfall worth thousands of pounds could prove a lifeline after years surviving on an artificially low income due to the DWP’s errors.
“Once compensation has been paid, the government needs to undertake a comprehensive review of its processes to ensure these mistakes are never repeated.
“Trust in pensions is fragile at the best of times and failures such as this will not help. Sadly, it will likely take years, if not decades, to rebuild the confidence lost as a result of this scandal.”
A DWP spokesperson said: “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 2023 to ensure pensioners receive the support to which they’re entitled."
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