MPs criticise £1bn state pension underpayments as ‘shameful shambles’

The Public Accounts Committee has issued a new report into state pension underpayments. DWP estimate that around 134,000 people (overwhelmingly women) have been incorrectly underpaid around £1 billion in state pensions, with some errors dating back decades.

Related topics:  Later Life
Rozi Jones
21st January 2022
Houses house of parliament commons government govt gov
"It is shocking that DWP’s regular checks regarded the level of error on state pensions as too small to be worth investigating"

The errors first came to light when LCP partner and former pensions minister Steve Webb drew cases to the attention of the DWP at the start of 2020.

An investigation by The National Audit Office into the underpayment of state pensions by DWP in September 2021 revealed that out of the 134,000 cases, around 94,000 are still alive and around 40,000 have died and payments could be made to estates.

However, DWP has identified around 15,000 cases where it is thought unlikely it will be able to trace the pensioner or heirs. Because records for the deceased are generally destroyed within four years, the true number who were underpaid before they died is likely to be far higher.

The NAO report reveals that the biggest error found to date was an underpayment of £128,000 and errors go back as far as 1985. About 1 in 8 arrears payments so far is for £40,000 or more.

The new Public Accounts Committee report refers to the episode as a ‘shameful shambles’ and makes a series of recommendations to the DWP. These include assessing whether antiquated computer systems can be upgraded more swiftly and being quicker to respond when mistakes are identified. The Committee also endorse a call by Steve Webb for the Government to explain why divorced women have so far been excluded from having their state pensions checked.

The report highlights the fact that people who finally receive backdated payments from DWP are given little help to understand what this means for their tax position and how any lump sums might affect their entitlement to means-tested benefits or help with social care costs.

Commenting, Steve Webb said: “The Committee are right to be highly critical of DWP over this whole debacle. It is shocking that DWP’s regular checks regarded the level of error on state pensions as too small to be worth investigating when in reality many thousands of people have missed out on potentially life-changing amounts of money.

"I welcome the fact that the Committee has highlighted the fact that divorced women have so far been excluded from this exercise and I call on the Government to do more to ensure that these women also have their pensions checked. DWP’s defensive reaction to questions and scrutiny over this issue suggest that lessons have still not been learned. There are still far too many people missing out on the state pension to which they are entitled and DWP needs to track them all down as a matter of urgency.”

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