The Department for Work and Pensions (DWP) revealed thousands of retirees were underpaid between 11 January 2021 and 31 October 2022.
According to the department’s case review data, 31,817 underpayments were identified in the period, meaning they are now owed a total of £209.3m ($252m, €242m).
The mis-calculations affected three groups.
The biggest group who received less pension than what they were owed were married women with 13,157 underpayment cases – £91.1m was repaid with an average of £6,929 each. They were then followed by those over the age of 80 with 10,784 cases. The DWP paid this group £34.2m, averaging £3,172 each.
Lastly, 7,876 widows and widowers were given less state pension than they were entitled to, with the department repaying the group a total of £84m – around £10,772 each.
A report by the National Audit Office (NAO) published last year also found that there had been significant issues with the DWP’s payment of the statement pension, with an estimated 134,000 pensioners being underpaid over £1bn – on average £8,900 each.
Steve Webb, partner at LCP, said: “The scale of these underpayments is so great that putting it right could easily end up taking four years or more from start to finish. It is quite shocking that well over a hundred thousand pensioners are to this day receiving the wrong rate of pension, and the DWP is clearly way behind schedule in fixing the problem.
“With cost of living pressures affecting many elderly people on low incomes, it is essential that the pace of fixing these errors is stepped up and people get the money they are due as soon as possible”.
‘Tragic scandal’
Tom Selby, head of retirement policy at AJ Bell, added: “While it is positive the government has identified over £200m of state pension underpayments, this is still a long way short of the £1bn the NAO estimates is owed to pensioners. This saga is particularly tragic as many of the people affected will have been struggling unnecessarily for years. What’s more, the NAO estimated around 40,000 of the people who were due a repayment had sadly died without receiving it.
“It is absolutely critical all those affected by this scandal receive the money they are owed as quickly and efficiently as possible. For retirees on low incomes preparing for a cold winter, a cash windfall worth thousands of pounds could prove a lifeline after years surviving on an artificially low income due to the DWP’s errors.
“Once compensation has been paid, the government needs to undertake a comprehensive review of its processes to ensure these mistakes are never repeated. Trust in pensions is fragile at the best of times and failures such as this will not help. Sadly, it will likely take years, if not decades, to rebuild the confidence lost as a result of this scandal.”
