A report released by the public spending watchdog on the Department for Work and Pensions (DWP) accounts has revealed that approximately 237,000 pensioners have been underpaid.
The total amount the DWP owes these people has reached a whopping £1.46 billion, as reported by the Daily Record. The National Audit Office (NAO) latest report said that this was a rise of £429 million, and that some 105,000 older people on the DWP’s best estimate at the end of 2020-21.
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The report was led by Comptroller and Auditor General of the NAO, Gareth Davies, and highlights that some underpayments go as far back as 1985. The report also reveals that the DWP has "identified several new groups of pensioners potentially affected by underpayment, the most significant relating to Home Responsibilities Protection (HRP)."
The HRP scheme was launched to help protect parents' and carers' State Pension credits while they stayed at home to look after children, and was replaced by National Insurance credits in 2010. However, this may have not been recorded accurately on National Insurance records.
The report also notes that the DWP is working with HM Revenue and Customs (HMRC) to better understand the scale, potential causes of these mistakes, and options on how to correct the wrongdoings. These newly identified errors account for most of the increase in the State Pension underpayment rate from 0.3 per cent to 0.5 per cent.
People could still be able to apply for the Home Responsibilities Protection if, for full tax years (April to April) between 1978 and 2010. Find out more about this on the GOV.uk website here.
Former pensions minister, Sir Steve Webb, now a partner at LCP (Lane Clark & Peacock) was the first to note the underpayments of State Pensions while working with This is Money. He shared on social media that he raised the HRP issue 14 years ago.
Sir Steve said: "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.”
The NAO also said that the increase in the number of underpayments is due to the DWP undertaking new computerised scans of its data. These were unable to be performed in 2021 to identify cases its staff had to review.
DWP has now conducted all the scans it needs to identify potentially affected cases, but will not know the full extent of the underpayments until it has fully reviewed every case.
The DWP has estimated that the outstanding liability, after payments made up to March 31, 2022, are sitting at £1.35 billion. They aim to complete the review of State Pension underpayments by the end of 2023.
However, the DWP recently told the Work and Pensions Committee that they intend to complete the exercise for those aged over 80, the most vulnerable people and those on category BL, by spring 2023.
They also plan to ramp up recruitment from 500 reviewers to 1,500, in order to complete the review in time. However, the NAO said that on current assessments, review and correction of all widowed pensioner cases may take until late 2024.
The NAO said: "A delay of this length would increase the total amount underpaid to pensioners by an estimated £14 million."
The DWP started a Legal Entitlements and Administrative Practice (LEAP) exercise in January last year, in order to address State Pension cases where people had been underpaid. So, who may be due money?
Find out more below.
Who could be due back payments for State Pension?
There are six groups in particular that have been strongly recommended to contact the pension service to see if they are entitled to more State Pension. These include:
- Married women whose partner turned 65 before March 17, 2008, and have never claimed an uplift to the 60 per cent rate
- Widows whose pension was not increased when their partner died
- Widows whose pension is now correct, but who think they may have been underpaid while their partner was still alive, especially if they reached the age of 65 after March 17, 2008
- Those over the age of 80 who receive a basic State Pension of less than £80.45
- Widowers and heirs of married women, where the women has now passed away, but was underpaid State Pension during her lifetime
- Divorced women, particularly those who divorced after they retired, to check that they are benefiting from the contributions of their ex-partner
Peter Schofield, Permanent Secretary at DWP, told the Work and Pensions Committee: “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 do I make a claim?
All you need to do is make a phone call to the pension service to find out if you are eligible for a State Pension refund. The number to call is 0800 731 0469.
More information can be found on the GOV.uk website here.
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 2022 and 2023 towards the underpayments exercise."
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