SP underpayments: Less than £100m out of £1bn repaid after one year
Pardon the Interruption
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The Department for Work and Pensions has repaid £94.3m out of about £1bn in underpaid state pensions after more than a year of corrections. The overwhelming majority of those underpaid are women; about 40,000 have already died without ever receiving the correct amount.
People with small pensions who claimed the state pension before 2016 were entitled to 60% of their spouse’s pension once the spouse reached retirement age. These payments should have been automatic since 2008, but the DWP wrongly only made the payments when pensioners claimed it.
The department estimates that it underpaid 134,000 pensioners by a total of more than £1bn as a result, with errors going back as far as 1985. About 94,000 pensioners are thought to be alive. The vast majority (90%) of the pensioners underpaid are women.
‘Way behind schedule’
The correction activity only started after a campaign by former pensions minister Sir Steve Webb, now a partner at LCP, and financial website ThisIsMoney.co.uk. The DWP has checked about 60,000 records so far; it has deployed 500 people to work on the corrections and is recruiting more, pensions minister Guy Opperman said on Thursday.
Despite this effort, Sir Steve said it seemed that the DWP is “way behind schedule” on the corrections, as only a fraction of the amount due has been paid back so far. At the current rate, the exercise would take more than 10 years.
Between January last year and the end of February this year, the DWP found 14,239 underpayments. The average amount repaid is £7,400 for married people, £9,500 for widowed pensioners and £4,100 for the over-80 category. On average, the department estimates that the roughly 118,000 pensioners it can trace – some will be untraceable –could receive payments averaging around £8,900. Underpayments range between £0.01 and a staggering £128,448.37 so far.
