DWP state pension underpayments branded 'shambles' as action demanded

Thousands of retired Britons – many of them women – who were underpaid on their State Pension have received more than £570 million in back payments, it has emerged.

Between January 11, 2021, and February 29, 2024 some 97,016 under payments were identified adding up to £571.6m, according to the Department of Work and Pensions (DWP).

However, this figure is just the tip of the iceberg with some finance industry experts suggesting as much as £3billion could be owed to more than 237,000 pensioners.

Dame Meg Hillier MP condemned the underpayments, which have led to real hardship for thousands of elderly people, as a “shameful shambles”.

Affected groups include women retiring under the old state pension system. This is because many did not receive the state pension they were entitled to under their husband’s national insurance record.

The head of retirement analysis at Hargreaves Lansdown, Helen Morrissey, said: “Progress is being made to rectify the large-scale issue of state pension underpayments, but it is very slow.

“Just over £571m has been returned so far but with estimates suggesting the scale of underpayments could be around £1.5billion there’s still a very long way to go.

“People have the expectation that the state pension they receive is correct but a series of errors in an already overly complicated system means that for many thousands of people this expectation has been incorrect.

“Some who queried the issue with DWP over the years were told there was no problem, and many have suffered real financial hardship as a result. These people have been let down and need resolution as soon as possible.”

Tom Selby, director of public policy at AJ Bell, said: “The news that the DWP has now identified over £570 million in state pension underpayments is undoubtedly positive for the progress of its correction exercise, though there remains a long way to go if the near £3billion in expected total costs are to be reconciled and sadly that means many more of those affected will still be awaiting payment.”

He added: “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.

“Once compensation has been paid, the government needs to undertake a comprehensive review of its processes to ensure these mistakes are never repeated.”

Mr Selby said: “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.”

A DWP spokesperson said: “The action we are taking now is correcting historical underpayments made by successive governments.

“Our priority is ensuring pensioners receive the financial support to which they are entitled and we have set up a dedicated team and devoted significant resources towards completing the correction exercise.”