Thousands of pensioners have been short-changed by the Government in a state pension blunder costing more than £800m.
On Thursday, the Department for Work and Pensions (DWP) said that more than 130,000 underpayments – mostly to elderly women – were uncovered between January 2021 and last month.
About 11,000 cases have been found in the past six months alone, increasing the total amount of underpayments from £735m in November 2024 to £804.7m as of 31 March this year.
The department said that in some cases, people may have received an overpayment of another benefit, such as pension credit.
Sir Steve Webb, former pensions minister and partner at LCP, said the total amount of state pension arrears to be paid out is set to pass the £1bn mark this year.
But why did the DWP underpay these individuals – and could you be affected by the scandal? The i Paper breaks it down and explains how you can find out if you’re eligible to claim money back.
The first correction exercise
The DWP began the initial correction exercise in January 2021, checking records to see if pensioners had been underpaid after it became aware that some had not received state pension increases in 2020 due to admin errors.
It prevented those entitled to uplifts under the pre-2016 pension system from receiving their payments, with errors dating back to 1985.
According to a DWP update issued on Thursday, this related to errors for:
Married women on low state pensions, whose pension was not automatically uplifted when their husband retired.
Widows whose state pension was not automatically reassessed when their husband died. Some widowers were also affected.
Over 80s with low state pension entitlements who were not automatically uplifted when they turned 80.
Around 130,000 people were found to have been underpaid – of these were over 50,000 widows and widowers, 47,000 married women, and 34,000 over 80s. The average arrears payment was just over £6,000.
The second correction exercise
The second correction exercise started in January 2024 and relates to missing “Home Responsibilities Protection” on the national insurance (NI) record of mothers who had children before the year 2000.
By September 2024, HMRC had issued over 370,000 letters to people who might have missed out and processed over 42,000 applications for this.
Of this, 19,000 had been passed to DWP to reassess state pensions. The department has processed around 11,700 of these and found arrears in just over 5,000 cases.
Total arrears paid were £42m, with an average payment of £7,859 per person.
‘This should never be allowed to happen again’
Sir Steve said it now looks as though the total amount underpaid will pass the £1bn mark this year, with over 170,000 people having lost out.
“We have become so used to stories about state pension errors that it is easy to become dulled to the scale of what went wrong.
“The vast majority of those who lost were women, some of whom were underpaid for decades or even went to their grave never paid the right state pension.
“The remaining corrections need to be handled as a matter of urgency. This should never be allowed to happen again.”
Rachel Vahey, head of public policy at AJ Bell, said it will take another two years, to the end of March 2027, before all cases are resolved.
She said: “It is absolutely critical all those affected by this scandal receive the money they are owed as quickly and efficiently as possible.
“The DWP is calling on customers to provide additional information to put an end to this sad episode. But that relies on these people getting online and engaging with the DWP.”
A spokesperson for the DWP said: “The action we are taking now will correct historical underpayments made by successive Government’s.
“We are fully committed to addressing these errors, not identified under previous Government’s, as quickly as possible.
“We have set up a dedicated team and devoted significant resources towards completing this.”
How to check if you have been affected
The DWP said that it would contact some married women. However, if you are a widow or over 80, you should still check to see whether you are entitled to any refunds.
Pension consultants LCP have a calculator to work out if you are owed any money.
To check if you have been underpaid and are owed any money, contact the Pension Service and ask about your situation.
They will need your National Insurance number, details of your current pension, and, if applicable, your spouse’s information.
You can call 0800 731 0469 and press option two, write to The Pension Service, Post Handling Site A, Wolverhampton, WV98 1AF, or find alternative contact details on the Pension Service website.
They will advise you on how to get your money back. If you are not satisfied with the response, you can always take your complaint to the Parliamentary Ombudsman.