Underpayment of the State Pension

The Department for Work & Pensions (DWP) estimates it has underpaid 134,000 pensioners, mostly women, over £1 billion of their State Pension entitlement, with some of the errors dating as far back as 1985.

In January 2021, DWP started an official exercise to correct the errors. The first of many.

There are three groups of State Pension claimants who may be affected:

• people who are married or in a civil partnership who reached State Pension age before 6 April 2016 and who may be entitled to a Category B uplift based on their partner’s National Insurance contributions

• people who have been widowed and their State Pension was not uplifted to include amounts they are entitled to inherit from their late husband, wife or civil partner

• people who have not been paid Category D State Pension (the non-contributory element of State Pension) uplift as they should have been from age 80.

Correction exercise

The DWP started a formal correction exercise on 11 January 2021 and plans to recruit additional staff members with the aim of completing the correction exercise by the end of 2023. The current estimate is that arrears will total £2.7 billion and increased ongoing weekly entitlement will amount to an extra £90 million per year.

The DWP say claimants in the affected groups do not need to contact the DWP as they are ‘in the process of issuing letters to all those found to be underpaid in accordance with the law, explaining how much they will be receiving in arrears and the reasons for the change to their State Pension rate.’

Failure to make a claim

A separate issue has also come to light where married women whose husbands reached State Pension age after them were required to make a separate claim to apply for an increase to their own State Pension before 17 March 2008. Those that didn’t at the time but make a claim now for example, will only be able to backdate their entitlement by 12 months.

People who may be affected by either of the above issues who do not currently claim a State Pension, or had no entitlement on a previous claim should make a new claim so the DWP are aware of them.

The value of pensions and investments and the income they produce can fall as well as rise.