The most recent report published by the National Audit Office on the Department for Work and Pensions (DWP) accounts for 2021-22 was released in October last year and revealed that around 237,000 older people have been underpaid their State Pension by a total of £1.46billion.
However, during a formal meeting this week with the Work and Pensions Committee, DWP indicated that it has identified a further 100,000 potential underpayments during its ongoing correction exercise. Permanent Secretary at DWP Peter Schofield, told the cross-party committee of MPs, chaired by Sir Stephen Timms: “We have found more cases of underpayment.”
He explained that due to a change in the scanning system during the exercise, a further 100,000 “potential” underpayments have been identified, which means that the sample of State Pension cases DWP will now look at for errors is 700,000 instead of 400,000. Mr Schofield said he thinks it could now take an extra year to complete the exercise given the current run-rate.
He said: “I am very sorry on behalf of the Department that we have made these underpayments, I am though pleased that I have now detected more of the underpayment that was out there.”
During the first 15 months of the correction exercise, the DWP reviewed 54,000 State Pension cases, followed by a further 58,000 over a seven-month period ending in October 2022. Mr Schofield explained this highlighted the increased run-rate that will “rapidly increase further” when more staff are assigned to the exercise.
He also said that out of the 112,000 cases DWP looked at they identified 31,817 with an underpayment and paid in total to that group of people, £209 million. This works out at an average of £6,568 per case, however, Mr Schofield pointed out that there was a "wide variety" of underpayments within that group which means that some people could have received more or less than others.
He explained: “The reason why there is potentially a wide variety is that some people weren’t getting what they were entitled to in terms of the State Pension, but they were then topped up through Pension Credit.
“So, you have some people who were underpaid, but were paid up on the Pension Credit, but when we calculate how much they’re owed we calculate how much Pension Credit that they received which they wouldn’t have received if they received the right State Pension.”
Conservative MP Siobhan Baillie asked how the process could be sped up to get the underpayments to people quicker, especially during the cost of living crisis, saying that people having to wait another year-and-a-half for the money is “too long”. Mr Schofield explained that by the middle of 2024 DWP will have 1,500 staff working specifically on the State Pension correction exercise.
State Pension underpayment progress
Payments made between January 2021 and October 2022 are listed below.
Married (Cat BL)
- Cases reviewed: 62,965
- Underpayments identified: 13,157
- Average arrears: £6,929
- Total amount repaid: £91.1m
Widowed
- Cases reviewed: 25,268
- Underpayments identified: 7,876
- Average arrears: £10,772
- Total amount repaid: £84m
Over 80
- Cases reviewed: 23,720
- Underpayments identified: 10,784
- Average arrears: £3,172
- Total amount repaid: £34.2m
Who may be due back payments for State Pension?
There are six particular groups strongly encouraged to contact the pension service to see if they could be entitled to more State Pension.
- Married women whose husband turned 65 before March 17, 2008, and who have never claimed an uplift to the 60 per cent rate
- Widows whose pension was not increased when their husband died
- Widows whose pension is now correct, but who think they may have been underpaid while their late husband was still alive, particularly 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, particularly those who divorced after retirement, to check that they are benefiting from the contributions of their ex-husband
How to check if you are affected or make a claim
A phone call to the pension service is the quickest way to find out if you are eligible for a State Pension refund. The best number to call is 0800 731 0469 but full contact details can be found on the Gov.uk website here.
State Pension payment rates 2023/24
Chancellor Jeremy Hunt confirmed in November that the Triple Lock will be used to uprate the State Pension this year. This guarantees that State Pensions increase by September’s inflation figure, wages or 2.5 per cent, whichever is higher.
The guarantee means that retirees are heading for a 10.1% increase to the State Pension from April.
Full New State Pension
You are eligible for the New State Pension if you are:
- a man born on or after April 6, 1951
- a woman born on or after April 6, 1953
New State Pension payment rates
- Weekly rate: £203.85, an increase of £18.70 from £185.15
- Four-weekly rate: £815.40, an increase of £74.80 from £740.60
Basic State Pension (Category A or B)
You are eligible for the Basic State Pension if you are:
- a man born before April 6, 1951
- a woman born before April 6, 1953
Basic State Pension payment rates
- Weekly rate: £156.20, an increase of £14.35 from £141.85
- Four-weekly rate: £624.80, an increase of £57.40 from £567.40
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