Thousands could be owed up to £60,000 State Pension as more missing pa…

Thousands could be owed up to £60,000 State Pension as more missing pa…

Tens of thousands of people could be owed State Pension back-pay of as much as £60,000 after more missing payments have come to light.

Former pensions minister Steve Webb has asked DWP to extend its efforts to rectify pension underpayments, following the latest findings.

The Department for Work and Pensions is already engaged in a correction exercise after the National Audit Office found pensioners had been underpaid by more than £1 billion in total, due to “repeated human errors.” An estimated 134,000 people on State Pension were paid the wrong amount.

There is now a call for the scope of this investigation to be expanded after other types of pension issues were uncovered.

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Sir Steve Webb, a former Liberal Democrat pensions minister who is now a partner at LCP (Lane Clark & Peacock), said several more situations of underpayments had emerged, including some amounting to up to £60,000.

He has written to Peter Schofield, long-lasting Secretary at the Department for Work and Pensions (DWP).

The letter says: “In your departmental report and accounts for 2020/21 you set aside around £1 billion for repayments to over 100,000 people in respect of state pension underpayments.”

The group already being looked at includes married women and some married men, some people whose spouse had died and and some people aged 80 or over whose pension was not “upgraded”.

The letter continues: “The purpose of this letter is to ask you to expand the scope of this exercise to include two further groups where I believe there is evidence of administrative error. These are:

“Women (and some men) who were divorced at pension age but whose pension was not assessed on the basis of their ex-spouse’s contributions;

“Women (and some men) who divorced post pension age and notified DWP of this fact but where their pension was not reassessed on the basis of their ex-spouse’s contributions.”

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Problems with underpayments came to light when Sir Steve, along with This is Money, brought individual situations to the DWP’s attention – and Sir Steve said he believed the “systemic” problems originally found may also exist for some divorced women.

The letter says: “If the Department accepts that a failure to act on a change in circumstances can cause widows and others to be underpaid, why not accept that divorced women could be missing out for exactly the same reason?”

Sir Steve said growing examples have emerged of divorced women who had before been underpaid due to errors, including:

  • A woman who was divorced when she reached pension age was not assessed on the basis of her ex-husband’s contributions. She was underpaid for 13 years and was recently awarded a back-payment of over £36,000
  • Another woman who was divorced when she retired and was told she had no state pension entitlement. When she recently made a claim, it was accepted she was entitled to over £140 per week and she was given a back-payment of over £60,000
  • A woman notified DWP of her post-retirement divorce in 2015 but no action was taken. As recently as 2021, she was told her pension was correct. She has now had an increase in her pension of over £50 per week plus arrears of £16,000
  • Another retiree who divorced post-retirement who has received arrears of £20,000 plus a large pension increase, Sir Steve said.

He said: “A series of individual situations has highlighted blunders which have led to divorced women being underpaid by tens of thousands of pounds, in some situations for a decade or more.

“The Department has dismissed concerns around this group far too lightly and should take another look to estimate the extent of the problem and then take action to put things right.”

Sir Steve said copies of the letter had also been sent to the chairs of the Work and Pensions Committee and the Public Accounts Committee, in addition as to the head of the National Audit Office.

A DWP spokesperson said: “We encourage people to contact us if they get divorced or their civil partnership is dissolved and every year we remind people about doing so alongside the uprating notifications we send out.

“We want everyone to claim the benefits to which they may be entitled and we urge anyone of state pension age – or their family and friends – to check if they are missing out on financial sustain.

“We apologise for the errors in the situations identified and have corrected our records and paid the arrears owed.”

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