At the start of this year, the Department for Work and Pensions (DWP) said that it expects to complete the correction exercise into State Pension underpayments for two groups of women by the end of 2023. At the time, Pensions Minister Laura Trott MP said the exercise for those on CAT BL and CAT D should be completed by the end of this year, but it could run through to late 2024.
This may be due to a further 100,000 State Pension cases which have been identified as having a possible underpayment. This means that DWP will be looking at 700,000 State Pension awards for errors, as opposed to the previously estimated 400,000, and could take an extra year to complete the exercise under the current run-rate.
The two groups of women include married women who should have received an upgraded State Pension and those aged over 80.
The latest figures from DWP show that £209.3million in State Pension underpayments have been repaid to 31,817 pensioners since the correction exercise began in January 2021 and the end of October 2022.
The recent report also shows that arrears payments made to affected married women average £6,929 and for those over 80, £3,172. While the check and correction exercise affects motley women, some men may have been underpaid too.
However, it’s important for anyone who receives an arrears payment to be aware that it may impact entitlement to Pension Credit.
A DWP spokesperson explained: "Claimants who have received Pension Credit for any part of the period for which State Pension arrears are due will have their Pension Credit award reassessed and the arrears payment will be reduced by the amount of Pension Credit that they would not have been paid if the correct amount of State Pension had been paid at the time.
"If they are still entitled to Pension Credit after the reassessment, their Pension Credit will not be affected if any arrears that may still be due do not take their total savings above £10,000.
"There is no set upper savings limit for Pension Credit; but every £500 in savings over £10,000 is treated as providing an income of £1 per week."
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
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: "DWP is making progress in dealing with State Pension underpayments but there’s a mountain still to climb. So far almost 47,000 underpayments have been identified with £300m being repaid. However, with estimates suggesting as many as 237,000 pensioners have been underpaid £1.46bn 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."
Who may be due back payments for State Pension?
Ms Morrissey explained: "The issue mainly affects women retiring under the old State Pension system. Some were unaware of the problem but many who queried the issue with DWP over the years were told there was no issue with many enduring real financial hardship as a result."
There are six groups of people 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% 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
You can also find full guidance on transferring Basic State Pension payments on GOv.UK here.
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.
Earlier this year, 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.”
To keep up to date with the latest State Pension news, join our Money Saving Scotland Facebook page here, follow us on Twitter @Record_Money, or subscribe to our newsletter which goes out Monday to Friday - sign up here.
READ NEXT
Women over State Pension age could be due up to £6,900 in back payments this year
Waspi women likely to get ‘tiny compensation’ for State Pension age change
Attendance Allowance claim form top tips which could help older people get up to £407
New planned review of State Pension age could see retirement rise to 68 as early as 2036