The National Audit Office (NAO) said 134,000 pensioners, mostly women, were underpaid pensions because outdated computer systems led to mistakes.
Who is affected?
The errors affect pensioners who first claimed State Pension before April 2016, do not have a full national insurance record, and should have received certain increases in their basic State Pension.
Between 11 January and 5 September 2021, the Department reviewed 72,780 cases it had identified as being at risk of having been underpaid or who contacted it querying their payment, and paid £60.6million of arrears to 11% of these cases.
The Department is prioritising individuals who fall into “at risk” categories, such as those who are widowed or over age 80.
What went wrong?
The errors occurred because State Pension rules are complex, IT systems are outdated and unautomated, and the administration of claims requires a high degree of manual review and understanding by case workers.
This makes some level of error in the processing of State Pension claims almost inevitable. The Department’s caseworkers often failed to set (and later action) manual IT system prompts on pensioners’ files to review the payments at a later date, such as their spouse reaching State Pension Age or their 80th birthday.
Caseworkers also often made errors when they did process prompts because frontline staff found instructions difficult to use and lacked training on complex cases.
How much money is involved?
The Department estimates that it will need to pay the affected pensioners it can trace a total of £1.053billion, representing an average of £8,900 per pensioner affected.
The Department has not assessed the demographics of pensioners likely to be affected, but most are likely to be women.
The estimates, however, are highly uncertain and the true value of the underpayments will only become clear once it has completed its review of all affected cases.
If I'm affected, will I get my money back?
The UK Government has said today that everyone would receive what they were owed.
A review is taking place to trace those affected, stretching back to 1985. But only some women are being fully paid. Others will only be able to claim for 12 months of missed payments.
However, up to 40,000 of those affected are thought to have died.
Click here to contact the Department for Work and Pensions.
Based on tax legislation at the time of publication. Please be aware that there will have been changes since this was published. Speak to your adviser for the most up to date information.
