A DWP administration error that led to decades of state pension underpayments has been described as a "shameful shambles" by a public spending watchdog - with thousands of elderly women still waiting for their money.
The Department for Work and Pensions (DWP) estimates it has underpaid 134,000 pensioners, mostly women, over £1billion of their state pension entitlement, with some errors dating as far back as 1985.
In January 2021, the DWP started an exercise to correct the errors - the ninth such exercise since 2018, the Public Accounts Committee (PAC) said.
The errors mostly affect widows, divorcees and women who rely on their husband's pension contributions for some of their pension.
The error was down to complex pension rules and a high reliance on manual systems which failed to identify the systematic underpayments.
But the PAC said the department should consider whether there are cost-effective ways to upgrade its IT systems "as a matter of urgency".
It also highlighted that there is also currently no formal plan for contacting the next of kin where a pensioner who was underpaid is dead.
And in another blow, it said the DWP has not given people who are worried they have been underpaid enough information to find out what they should do.
It urged the department to treat state pension underpayments as seriously as overpayments.
The committee went on to say the DWP has shown little interest in understanding the further knock-on consequences, including on social care provision, for those it underpaid.
Dame Meg Hillier, chairwoman of the PAC, said: "Departments that make errors through maladministration have a duty to put those it wronged back in the position they should have been, without the error.
"DWP is now on its ninth go at fixing these mistakes since 2018, the specialised staff diverted to fix this mess costing tens of millions more to the taxpayer and predictable consequences in delays to new pension claims.
"And there is no assurance that the errors that led to these underpayments in the first place will not be repeated in the correction exercise.
"This is a shameful shambles."
Who is affected?
It is thought that around 90% of those affected are women.
Out of 134,000 cases, around 94,000 are still alive and around 40,000 have died and payments could be made to estates. The DWP’s most recent records show 15,000 remain unidentified.
The underpayment relates to the "old" state pension system - affecting those who reached pension age before 6 April 2016 - when special provisions applied for married women.
Many of these people do not have a full NI record, and should have received certain increases in their basic state pension.
Under these rules, married women who had a poor pension in their own right could claim a 60% basic state pension based on their husband's record of contributions.
However, some of these pension were not automatically increased at a certain point.
Others who missed out include pensioners who should have been paid the minimum 60% of the basic state pension after they turned 80.
The basic rate state pension pays £137.60 a week, so someone on a 60 per cent rate should receive around £82.45.
The Department is prioritising individuals who fall into "at risk" categories, such as those who are widowed or aged over 80.
Married couples can refer to their most recent annual state pension statement to check if they are affected.
You could be underpaid if you are:
- A married woman over state pension age, who reached pension age before 6 April 2016 and
- Your husband is over state pension age and
- Your husband has a full basic state pension, currently £129.20 a week, in his own right and
- You are getting a weekly basic state pension of less than £77.45 per week.
How to check and what to do if you identity a shortfall
The DWP says those whose husband became entitled to their pension on or after March 17, 2008, do not need to take any action and will be contacted.
To check if you’ve been underpaid, you can use this online calculator created by Lane Clark & Peacock.
You can also check how much you are being paid by monitoring your bank account or annual state pension statement.
If you think you have not had the correct state pension amount for any other reason, you should contact the Pensions Service arm of the DWP directly.
You can call on 0800 731 0469, but be aware that the lines are only open from 9.30am to 3.30pm Monday to Friday.
