Eldery women will be potentially handed back a ‘mindnumbing’ £3billion in underpaid state pension in a scandal discovered by former Pensions Minister Steve Webb and This is Money.
The huge bill for shortchanging women on their pensions for decades was revealed by the Office for Budget Responsibility alongside the Budget announcements today.
The sum owed to women is massively higher than the £100million previously estimated by Webb, who launched a joint investigation with This is Money
Massive blunder: Many elderly women lost out on state pension because junior civil servants failed to manually update their individual records during past decades
What does OBR say? Figure included in its fiscal outlook released today
The OBR’s fiscal outlook says the DWP has ‘identified underpayments of state pension relating to entitlements for certain married people, widows and over-80s back to 1992’.
It goes on: ‘Our forecast reflects an initial estimate that it will cost around £3billion over the six years to 2025-26 to address these underpayments, with costs peaking at £0.7billion in 2021-22.’
Webb, a former Pensions Minister who is now a partner at LCP, said: ‘This figure is truly mind-numbing. When we first looked into this issue a year ago I had no idea it would explode into such a huge issue.
Steve Webb: ‘ ‘Repayments of £3billion over the next five years imply huge numbers of women have been shortchanged’
‘Repayments of £3billion over the next five years imply huge numbers of women have been shortchanged, potentially for a decade or more.
‘The Government needs to devote serious resources to getting these repayments out quickly as these women have waited long enough.’
Labour’s Shadow Pensions Minister, Matt Rodda, said: ‘The administrative errors that led to pension underpayments should not have been allowed to happen.
‘Conservative incompetence has let down the tens of thousands of women who have not received the pensions they deserve and worked hard for.
‘The Government must remedy this issue as quickly as possible and take steps to ensure similar mistakes of this scale cannot happen again.’
Ros Altmann, who succeeded Webb as Pensions Minister, said: ‘I am delighted to see the DWP is now taking this issue seriously and setting aside the money needed to ensure women who have been living on far less pension than they were entitled to, receive compensation for the past years of underpayments.
‘Congratulations to This is Money for its brilliant work on highlighting this. Initially, the Department perhaps did not realise how widespread this problem was, or how many women were affected, but it does now seem that they have recognised the scale of the issue and are working hard to address it.
Why are some women being underpaid state pension?
Married women who retired on small state pensions before April 2016 should get an uplift to 60 per cent of their husband’s payments once he reaches retirement age too.
Since 2008, the increases are supposed to be automatic, but before that women had to apply to get the full sum they were due.
Find out how to check if you are underpaid and what to do about it below, or if you are a widow see
‘These women need their money as soon as possible as many will have been living on very meagre incomes unnecessarily and had a much poorer quality of life than they should.’
Current Pensions Minister Guy Opperman recently told MPs that more than a hundred government staff are now working to assess and manually correct individual records and more are being assigned to sort out the ‘significant legacy issue’.
He explained that many elderly women lost out on state pension because junior civil servants failed to manually update their individual records during past decades.
This is Money initially broke the scandal in a story about
We have published a series of follow-ups, including
We also reported on cases where elderly women who were underpaid tens of thousands of pounds between them suffered
Are YOU being underpaid state pension?
But Webb stresses that the website is simply designed as a useful tool, and anyone with any doubt about the amount of pension they are receiving should
If you are a widow and think you have been underpaid,
Meanwhile, many women appear to be struggling to get interest on their belated state pension payments, and it is worth following this up if you receive a backpayment.
This is Money understands the DWP is deciding interest payments based on whether a woman was underpaid for more than a year, whether it was down to government error and whether interest would amount to £10 plus.
Readers can contact Steve Webb at email@example.com. Please put DWP CLAIMS in the subject line and include your own and your husband’s date of birth (and death if you are a widow), how much you both receive in state pension and a contact telephone number.
But apologies in advance, we cannot reply to everyone and you should always prioritise contacting the DWP using the details above.
What does the DWP say?
The DWP is expected to release further comments shortly. It’s previous statement is as follows.
‘We are aware of a number of cases where individuals have been underpaid state pension. We corrected our records and reimbursed those affected as soon as errors were identified,’ says the DWP.
It adds that married women who are already getting a state pension are required to make a separate claim to have it increased if their husband reached state pension age before 17 March 2008.
A claim is not needed if their husband reached state pension age from 17 March 2008 onwards.
The DWP encourages anyone who thinks they have failed to claim a state pension increase they are eligible for to contact the department.
It says ‘interest and consolatory payments’ will be considered on a case-by-case basis and depend on individual circumstances.
Read the DWP’s response to Steve Webb’s petition calling for a full search for underpaid pensioners
Podcast special with Steve Webb on underpaid state pensions
Our pensions agony uncle Steve Webb and pension and investing editor Tanya Jefferies joined Simon Lambert and Georgie Frost on a This is Money podcast special last summer to explain the issue of underpaid state pensions.
They tell the stories of the women paid thousands less in state pension over the years than they should have been – and discuss their probe.
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