Thousands of women are owed compensation because of failures in how changes to the State Pension were communicated, according to an official report.
The final report published by the Parliamentary Health Services Ombudsman (PHSO) recommends that the Department for Work and Pensions (DWP) apologises to the women affected and issues them with compensation.
However, this is unlikely to be the end of the saga, as the Ombudsman’s compensation recommendations are not only less than campaigners were hoping for, but also seem unlikely to be enacted by the DWP.
The investigation has lasted several years and was extended by a legal challenge from the Women Against State Pension Inequality (WASPI) campaign. It was conducted to investigate the DWP’s failure to properly notify women born in the 1950s that the State Pension age would be changing from 60 to 66 over the course of the 2010s. WASPI campaigners say that the DWP’s oversight affected over 3m women and caused many of them a significant degree of emotional and financial stress.
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.
Will WASPI women get compensation?
The Ombudsman’s long-awaited report combines the revised findings from stage two of their investigation – which details the injustices they have found – with stage three, which outlines their recommendations for how to remedy the situation.
In the report, the Ombudsman reaffirms its findings from the first stage of their investigation, in which it found that the DWP had committed “maladministration” by failing to write promptly to the women affected. While the changes were technically made public knowledge in 1995, the DWP did not send out direct notice of the changes to the women affected for over 14 years, leaving some with just 12 months’ notice of the delay.
The report goes on to state that this resulted in “complainants losing opportunities to make informed decisions and do things differently, and diminished their sense of personal autonomy and financial control”. However, it denies that the maladministration led to “direct financial loss”.
Some complainants sampled in the Ombudsman’s report said they had lost thousands, tens of thousands and even hundreds of thousands of pounds due to leaving work years before they were able to claim their State Pension. The Ombudsman acknowledges these losses, but does not consider them “direct”, since they were a result of choices made by these women – despite being based on incorrect assumptions.
A separate “remedy” section of the report details the Ombudsman’s recommendations for how the DWP could put the situation right, making the case that the DWP should apologise to the women involved and take responsibility for the error.
It also recommends the government issue financial compensation to those affected, though it is not specific about the amount that should be paid, or how it should be given. The Ombudsman generally uses a scale to determine the compensation it recommends based on “severity of injustice”, and argues in the report that level three (£500-£950) and level four compensation (£1,000-£2,950) would be appropriate for most complainants.
However, the report acknowledges both the logistical difficulty in compensating everyone based on their individual circumstances, and the “significant cost” of compensation, which would run to billions of pounds.
This will come as a disappointment to campaigners who were hoping for a larger, more concrete recommendation. Campaigners, as well some MPS, have called on the government to issue £10,000 payouts to the women affected by the change, a figure based on the Ombudsman’s highest recommended level of compensation for incidents which have had “profound, devastating or irreversible impacts on the person affected”.
When will WASPI campaigners get a final decision?
While the Ombudsman can make recommendations, it lacks the power to enforce them, and the report notes that the DWP is unlikely to take action, based on previous comments the department has made and its response to complaints. As such, the Ombdsuman has already made an appeal to Parliament to intervene.
The report stated: “What DWP has told us during this investigation leads us to strongly doubt it will provide a remedy … We are taking the rare but necessary step of asking Parliament to … identify a mechanism for providing appropriate remedy for those who have suffered injustice.”
“We think this will provide the quickest route to remedy for those who have suffered injustice because of DWP’s maladministration.”
As it stands, it’s unclear what action – if any – the DWP will take. A spokesperson for the department said: “We will consider the Ombudsman’s report and respond in due course, having cooperated fully throughout this investigation.”.
Angela Madden, chair of WASPI, said: “The DWP’s refusal to accept the clear conclusions of this five-year-long investigation is simply unbelievable. One of the affected women is dying every 13 minutes, and we just cannot afford to wait any longer.”
You can read the Ombudsman’s statement here or their full report on stages two and three of their investigation here.
What is the WASPI campaign?
The government announced in 1995 that the State Pension age for women would be increased in order to bring it in line with the men’s age. This was gradually rolled out over the 2010s, but many women felt blindsided by the changes, claiming they had not been properly informed by the DWP and had been forced to alter their retirement plans at short notice.
Many women had left work, taken up caring responsibilities or otherwise made plans on the assumption that they would be able to claim the State Pension from age 60. Some were forced to sell property, return to work or rely on elderly parents for help in order to make ends meet.
The Women Against State Pension Inequality (WASPI) campaign was formed to pursue redress for this failure of communication. The group has made it clear that while they support the equalising of State Pension ages, they object to the lack of transparency about the changes.
The gender pension gap
Despite significant progress in closing the gender pay gap over recent years, millions of women are still on course to end up with much less in their pensions than men. Read more in our guide Women and the gender pension gap.
According to research by the Pensions Policy Institute in 2019, women in their 60s will on average retire with £51,000 of savings, compared to men who on average will retire with £157,000 of savings.
Separate research by Scottish Widows found that women typically don’t claim their fair share of pension savings following a divorce. Seven in 10 couples don’t consider pensions during divorce proceedings, the insurer found, leaving women short-changed by £5 billion every year. Read more in our guide How are pensions shared in divorce.
Further help
If you’re not sure when you’ll receive your State Pension, you can use the government’s State Pension age calculator here. To find out more about the State Pension, read our article on How the State Pension works.
If you have been affected by the changes to the women’s State Pension age and are seeking work, you can search for jobs in your local area here. You can also find information on benefits which might help you bridge the financial gap if you’re struggling to make ends meet or you have caring responsibilities in our Government benefits section.
If you’re not sure whether you qualify, or don’t know how to start your claim, see our article on Five free sources of help if you’re making a benefits claim. If you need additional support, it may be worth exploring whether you’re eligible for charitable assistance. Find out more about charities that help women in need.
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.
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