£1bn worth of underpaid state pension income

According to a new report, more than £1 billion worth of state pension payments has not been paid.

The National Audit Office (NAO) says that 134,000 state pensioners were paid less than they were due. Women were adversely affected by the error, the result of repeated human error.

In response, the government said that everyone would receive the state pension income they were owed.

While reassuring that the government will restore underpaid amounts, the NAO report raises significant issues about inefficiencies at the Department for Work and Pensions (DWP).

In response to the report, Meg Hillier, chairman of the Public Accounts Committee, said:

“This is not the first widespread error we have seen in the DWP in recent years. Correcting these errors comes at great cost to the taxpayer.

“The DWP must provide urgent redress to those affected and take real action to prevent similar errors in future.”

According to the report, the issue relates to the previous state pension system.

Married women with a poor National Insurance contribution history in their own right could claim a higher state pension based on their husband’s contribution record.

Women could claim up to 60% of the husband’s state pension under their ‘old’ state pension system.

The DWP is reviewing their files to identify those affected by the underpayments, with payments caught up in the error dating back to 1985.

Underpayments could total more than £1 billion, with an average of £8,900 for each pensioner affected.

However, an estimated 40,000 underpaid women have already died.

The reason for the error appears to be a complex state pension system, along with outdated computer systems and many manual tasks. The report concluded:

“This makes some level of error in the processing of state pension claims almost inevitable.”

A DWP spokesperson said:

“We are fully committed to ensuring the historical errors that have been made by successive governments are corrected, and as this report acknowledges, we are dedicating significant resource to doing so. Anyone impacted will be contacted by us to ensure they receive all that they are owed.

“Since we became aware of this issue, we have introduced new quality control processes and improved training to help ensure this does not happen again.”