Hundreds of thousands of people are collectively owed more than £1bn in State Pension payments after a series of errors by the Department for Work and Pensions (DWP) led to them being underpaid for years.
The DWP has promised to reimburse all those who have been left out of pocket by the end of 2023. So far, it has repaid more than £300m in State Pension underpayments, but there’s still an enormous amount to repay to meet its target. It’s estimated that as many as 237,000 pensioners have been underpaid around £1.46bn.
In the 2022/23 tax year alone, State Pension underpayments reached the highest amount on record, latest figures reveal, with the total amount underpaid standing at £670m, compared to £540m the previous year.
The State Pension underpayments primarily affect women who claimed their State Pension before 6 April 2016, who do not have a full National Insurance Contribution (NICs) record, and who should have received increases in their basic State pension.
In total, women who may have received less than their rightful State Pension entitlement include 53,000 married women, 44,000 widows and 37,000 aged over 80, according to figures from a National Audit Office (NAO) report. The £1 billion owed amounts to around £8,900 in underpayments for each person affected, with one in eight due more than £40,0000 to make up the pension they should have received. The largest amount one woman has been underpaid currently stands at £128,000.
The NAO carried out an investigation after findings uncovered with the help of Sir Steve Webb, former pensions minister, revealed that many married women had missed out on State Pension payments because they were unaware they could claim a proportion of their husband’s entitlement. Read more in our article Women owed £3 billion backdated pension payments, which is based on previous estimates of how much women have been underpaid. However, the exact amount will only become clear over time and the figures have already been revised several times.
The latest figures on underpaid State Pensions come as the DWP faces a separate scandal over delays to State Pension payments to thousands of new pensioners. Read more in our article Underpaid State Pension scandal shows system ‘unfit for purpose’.
It’s important to know if you might be affected and how to make a claim rather than wait for the government to put right the amount you should receive.
Here, we explain who might be entitled to a higher State Pension, and how to make a claim and increase your payments if you believe you’re among those affected.
If you’re thinking about getting professional financial advice, you can find a local financial adviser on VouchedFor or Unbiased.
Alternatively, if you’re looking for somewhere to start, we’ve partnered with independent advice firm Fidelius to offer Rest Less members a free initial consultation with a qualified financial advisor. There’s no obligation, however if the adviser feels you’d benefit from paid financial advice, they’ll talk you through how that works and the charges involved.
Fidelius are rated 4.7 out of 5 from over 1,500 reviews on VouchedFor, the review site for financial advisors.
Why are some women receiving less State Pension than they should?
There are two types of State Pension (basic State Pension and the new State Pension), and which you receive depends on when you were born. Find out more in our guide How the State Pension works. The underpayments mainly affect women falling under the older-style system.
Under the State Pension system in place before 6 April 2016, you will receive less than the full basic state pension if you don’t have 30 qualifying years’ worth of National Insurance Contributions. To increase the amount received, women were often able to substitute their husband or ex-husband’s credits for their own record to make up for time taken out of work to care for children or relatives, for example. So, if a husband was entitled to a full State Pension, his wife could claim a pension amounting to 60% of the full basic State Pension.
For example, the current full basic State Pension for 2023/24 is £156.20 a week, which makes the amount a woman who reached State Pension age before 6 April 2016 can receive £93.72 a week (60% of £156.20).
However, some women were not aware they could claim an additional State Pension based on their husband’s contribution, and before 17 March 2008 they had to make a claim themselves. This resulted in thousands of women failing to claim as they simply were unaware of their entitlement and the process involved.
In addition, there are several other groups of women who may also be receiving less State Pension than they should (see below).
How do I know if I’m being underpaid?
Whether you fall under the new or old State Pension system, generally, it’s important to check your National Insurance record if you aren’t receiving the full amount of State Pension and believe that your working history should mean that you have paid enough contributions to receive this.
To receive the full new State Pension you’ll currently need to have built up 35 ‘qualifying years’ of National Insurance Contributions over your working life, compared to 30 years under the old system. The current new State Pension for those reaching retirement age on or after 6 April 2016 stands at £203.85 a week in the 2023/24 tax year (or £10,600.20 a year).
Bear in mind that if you were contracted out of the Additional State Pension then this will reduce the starting amount you receive under the new State Pension, as you will have paid lower rates of contributions during your qualifying years. If you’re unsure whether you were contracted out, you can ask your pension provider, or check your old payslips – if the National Insurance contributions line has the letter D or N next to it, then you were contracted out. If it is the letter A, then you were not contracted out.
You can also Check your State Pension to review any gaps in your record too. You can contact the National Insurance Contributions Office with any queries if there are missing years where there shouldn’t be, or write: PT Operations North East England, HM Revenue and Customs, BX9 1AN, United Kingdom.
As mentioned, women in particular are at risk of being underpaid the State Pension. The DWP states it is currently focusing on correcting payments for women over 80, and widows. However, you may also be due a payment and an increase in your State Pension if you are a married or divorced woman. In particular, consider if you fall into any of the following scenarios:
- You are a married woman who reached State Pension age before April 2016, with an entitlement that amounts to less than 60% of your husband’s basic state pension (or £93.72 based on the current basic state pension at £156.20 a week).
Bear in mind that how long you can backdate claims will depend on whether your husband reached 65 before 17 March 2008. In this case, you can backdate 12 months. However, if he reached State Pension age after this date, when you should have automatically received an increase in the State Pension, you are able to make a claim for the full amount you should have received up to the date your husband retired.
You are a widow and you did not receive an increase in your pension when your husband died. You may be owed a payment from both before the death of your husband, and after, and going forwards, you may be entitled to a full basic state pension, alongside some of your late husband’s additional State Pension if this applies.
You are a woman who divorced post retirement and in receipt of a small pension. You may be entitled to more as a result of your ex-husband’s NICs record, but the uplift may not have been applied in some cases. This only applies, however, if you have not remarried or entered a new civil partnership. If you have married and divorced several times, your most recent ex-husband’s record is taken into account.
You are a woman aged over 80 and receive a basic pension of less than £93.27 a week. You may be entitled to some more State Pension that isn’t based on your National Insurance record, known as a non-contributory State Pension. Recent figures from the DWP suggested that as many as 72,000 over-80s have been underpaid more than half a billion pounds, according to government figures, and will receive an average payment of more than £10,000 over the next five years.
However, you should not have received less than your State Pension entitlement if you fall into any of the following categories:
- You’re a married woman whose husband has not yet reached State Pension age;
- You’re a single woman who’s never married;
- You’re a married woman but your husband was not entitled to a full basic State Pension.
Pensions consultant Lane Clark & Peacock has developed a useful calculator to help married women identify if they have been underpaid. You simply enter a few basic details, including you and your husband’s ages, and how much State Pension you currently each receive, and it will tell you if you are likely to be eligible for more.
How can I make a claim for an underpaid State Pension?
If you think you are owed State Pension payments and that you’re eligible for a payout, you should get in touch with the Pension Service and tell them about your situation. You may be owed back payments, and these should be paid to you with interest added, alongside receiving an uplift in your weekly State Pension payment.
You can contact the Pensions Service by telephone on 0800 731 0469 or find out more here. It has a large team working on underpayments, given the string of news stories on the topic over the past year, and it’s working to trace those affected. Make sure you have your National Insurance number to hand and be ready to answer various questions to prove your identity.
What if the person who has been underpaid has died?
According to the latest figures on the 134,000 owed missing State Pension payments, around 40,000 have died. However, as the DWP does not typically keep records for more than four years after a pensioner’s death, this figure may not be accurate.
In the case of a pensioner who has died and did not receive their rightful entitlement during their lifetime, and where they can be identified, any missed payments should be paid to their next of kin, or particular beneficiary. However, the NAO is calling on the DWP to enable beneficiaries or executors of estates to find out if a deceased woman was underpaid. Meanwhile, if you believe your late mum, for example, was underpaid the State Pension during her lifetime you should get in touch with the Pension Service (see below) to make a claim.
Get advice on your State Pension and other retirement savings
If you’re concerned about your State Pension, the first thing to do is contact the Pensions Service by telephone on 0800 731 0469 or find out other ways to get in touch with them here.
Bear in mind that the amount you receive from your State Pension should increase over the years. Each April, any rise in the State Pension depends on the ‘triple lock guarantee’, which means the increase will be the highest of the growth in wage, inflation (based on the Consumer Prices Index, or CPI rate of inflation in September the preceding year), or 2.5%.
The triple lock was suspended during the 2022/23 tax year following an unusually high surge in wages during coronavirus, but has been reinstated for the 2023/24 tax year. This means that the State Pension rose by 10.1% (September’s inflation figure) from 6 April 2023. Read more about this in our guide What is the pension triple lock?
While the State Pension is an important part of retirement planning, you may have other workplace and private, or personal pensions that can also provide you with an income in retirement.
If you want to get some tips and guidance for free, and you’re aged at least 50, you can arrange a phone appointment via the government’s free service called Pension Wise. If you want personal recommendations or advice about your specific circumstances, you can find a local financial advisor on VouchedFor or Unbiased, or for more information, check out our guides on How to find the right financial advisor for you or How to get advice on your pension.
If you’re thinking about getting professional financial advice, you can find a local financial adviser on VouchedFor or Unbiased.
Alternatively, if you’re looking for somewhere to start, we’ve partnered with independent advice firm Fidelius to offer Rest Less members a free initial consultation with a qualified financial advisor. There’s no obligation, however if the adviser feels you’d benefit from paid financial advice, they’ll talk you through how that works and the charges involved.
Fidelius are rated 4.7 out of 5 from over 1,500 reviews on VouchedFor, the review site for financial advisors.
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