The DWP has identified almost £500million in state pension underpayments over the past two and a half years.
An exercise to establish how much is owed found there were 82,323 underpayments between January 11, 2021 and October 31, 2023, with a total of £497million owed.
Tom Selby, head of retirement policy at AJ Bell, said: “This saga is particularly tragic as many of the people affected will have been struggling unnecessarily for years.
“What’s more, the National Audit Office (NAO) has previously estimated around 40,000 of the people who were due a repayment had died without receiving it.
“It is absolutely critical all those affected by this scandal receive the money they are owed as quickly and efficiently as possible. With winter closing in and many retirees struggling to make ends meet as inflation eats away at their living standards, a cash windfall worth thousands of pounds could prove a lifeline after years surviving on an artificially low income due to the DWP’s errors.”
Most people who have been underpaid the state pension fit into these three categories:
- Category BL – Pensioners receiving a low basic state pension in their own right, but are entitled to increase it using their living spouse or civil partner’s contributions once their partner becomes entitled to state pension
- Widowed pensioners – Widows and widowers who are not entitled to a full basic state pension based on their own contributions can inherit a basic state pension from their spouse or civil partner up to the full basic state pension rate;
- Category D – Men and women previously receiving no or low amounts of basic state pension, who may be able to increase their state pension from age 80.
These are the average arrears payments for each of the main categories:
- Married (Category BL) – 5,931
- Widowed – £12,383
- Over 80 (Category D) – £2,245.
Mr Selby added: “Once compensation has been paid, the government needs to undertake a comprehensive review of its processes to ensure these mistakes are never repeated.
“Trust in pensions is fragile at the best of times and failures such as this will not help. Sadly, it will likely take years, if not decades, to rebuild the confidence lost as a result of this scandal.”
Chancellor Jeremy Hunt confirmed in the autumn statement the triple lock on the state pension would be retained, meaning state pensioners will get an 8.5 percent payment increase next year.
The full new state pension will go up from £203.85 a week to £221.20 a week, basic state pension will go up from £156.20 a week to to £169.50 a week, an increase of almost £700 a year.
A person typically needs 30 years of National Insurance contributions to get the full basic state pension and 35 years of contributions to get the full new state pension.
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