Hundreds of thousands of people owed State Pension payments are being left out of pocket, as the Department for Work and Pensions (DWP) is “not even trying” to correct the errors that led to a series of underpayments, according to a damning new report.
The Public Accounts Committee (PAC) said that attempts to reimburse around 134,000 pensioners who are collectively owed more than £1bn in State Pension payments have been a “shameful shambles”. It added that the State Pension system has been “unfit for purpose” for decades, because of old IT systems leading to errors administrating claims.
The errors mainly 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. Many pensioners are continuing to be underpaid as a result of the mistakes, and tens of thousands have passed away without receiving a penny of the money they were owed. Read more in our article Is my State Pension being underpaid?
Around 500 staff were recruited by the DWP to correct the errors, at a cost of £24.3m to the taxpayer. However, the PAC report states that the DWP has shown “little interest” in reimbursing State Pension underpayments and failed to clearly communicate with those affected.
Meanwhile, people who have received a lump sum payment of arrears may still be out of pocket, as this could impact on any other benefits they receive, such as pension credit or a reduction in financial assistance to meet care bills.
Dame Meg Hillier MP, chair of the Public Accounts Committee, said: “For decades the DWP has relied on a State Pension payment system that is clunky and required staff to check many databases – and now some pensioners and the taxpayer are paying in spades.
“Departments that make errors through maladministration have a duty to put those it wronged back in the position they should have been, without the error.”
Sir Steve Webb, a former pensions minister who has led a campaign on underpaid State Pensions, said: “The committee is right to be highly critical of the DWP. It is shocking that its regular checks regarded the level of error on State Pensions as too small to be worth investigating when in reality many thousands of people have missed out on potentially life-changing amounts of money.”
A report in September by the National Audit Office (NAO) found that around 134,000 pensioners have been underpaid their State Pension owing to complex rules, with the administration of claims needing “a high degree of manual review and understanding by case workers.”
A spokesman for the DWP, which is issuing a formal response to the report, and has pledged to reimburse those affected by the end of 2023, said: “Resolving the historical State Pension underpayments that have been made by successive governments is a priority for the Department and we are committed to doing so as quickly as possible.”
If you’re considering getting professional financial advice, Unbiased is offering Rest Less members a free pension review. It’s a chance to have a qualified independent financial advisor (IFA) take a look at your pension arrangements and give an unbiased assessment of your retirement savings.
The review is free and without obligation, but if the IFA feels you’d benefit from paid financial advice, they’ll go over how that works and the charges involved.
Where to go for more help
You can find more information on who may be entitled to a higher State Pension, and how to make a claim if you think you may be affected in our article Is my State Pension being underpaid?
If you’re concerned about your State Pension, you can contact the Pensions Service by telephone on 0800 731 0469 or find out other ways to get in touch with them here.
However, while the State Pension often forms the foundation of your retirement income, 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.
Rest Less Money is on Instagram. Check out our account and give us a follow @rest_less_uk_money for all the latest Money News, updated daily.