About 200,000 pensioners have yet to be compensated for underpayments in their UK state pension nearly two years after the shortfall was first flagged, official figures showed on Tuesday.
In 2020, the government became aware of state pension underpayments going back nearly four decades, with the errors mainly affecting older women who did not receive automatic uplifts in their state pension that they were entitled to.
The Department for Work and Pensions estimated that it underpaid about 237,000 pensioners a total of £1.46bn in benefits.
On Tuesday, the DWP acknowledged that during a checking process between January 2021 and October this year, it had identified and paid nearly 32,000 state pension underpayments, worth nearly £209mn — just 14 per cent of the total £1.46bn owed.
The average state pension underpayment arrears ranged between £3,000 to £10,000, the DWP update showed.
“It is extremely concerning that so many pensioners are still missing out on their state pension due to administrative errors,” said Caroline Abrahams, charity director at advocacy group Age UK.
“Some have been underpaid their rightful pension for many years and can ill afford to wait even longer, especially as they worry about rising bills and the winter ahead. The DWP must intensify its efforts to reach those affected and ensure everyone receives their correct entitlement.”
Sir Steve Webb, a former pensions minister, added: “It is quite shocking that well over a hundred thousand pensioners are to this day receiving the wrong rate of pension.”
The state pension underpayments largely affect women born before 1953, who were married or divorced and did not receive automatic increases to their state pension that they were entitled to. Those who reached state pension age after April 2016 are unlikely to be affected.
Webb, now a partner at LCP, the actuarial consultants, pointed out that the next of kin of pensioners whose state pension was underpaid, but who had died many years ago, may never receive their full entitlement because historical records were often destroyed by departments.
The National Audit Office and various parliamentary committees have previously said that the DWP’s guidance to pensioners about potential state pension underpayment was inadequate and could discourage them from obtaining their full entitlement.
The House of Commons public accounts committee this month said efforts to rectify the underpayment of state pensions were “too slow to meaningfully put things right”. Despite underpayments going back as far as 1985, the DWP’s overall exercise to correct the issue has been delayed from the end of 2023 to the end of 2024.
In response, the DWP said it had set up a team dedicated to correcting the underpayments and had devoted significant resources, with more being allocated throughout 2023 “to ensure pensioners receive the support to which they’re entitled”.
“The action we are taking now will correct historical underpayments made by successive governments,” the DWP said. “We are fully committed to addressing these errors, not identified under previous governments, as quickly as possible.”