"Tens of thousands of married women, widows and the over 80s have been underpaid, with arrears in some cases exceeding £100,000."
As the report notes, although underpayments had been going on for decades, action was only taken after a series of cases were brought to the attention of the DWP in early 2020 by LCP partner and former minister Steve Webb, in partnership with the This is Money website.
In May 2020, LCP published a paper entitled ‘Are thousands of older women being short-changed on their state pension’, which was based on an FOI reply obtained by Steve Webb in February 2020.
But DWP did not regard this as a serious problem until it undertook its own scan of records in July/August 2020, and it made no provision for underpayments in its Departmental accounts which were prepared in May/June 2020.
The report sets out DWP’s latest estimate of the scale of the problem, which is that around 134,000 people have been underpaid and that it will have to pay out around £1 billion in lump sum payments. It is thought that around 90% of those affected are women. Out of 134,000 cases, around 94,000 are still alive and around 40,000 have died and payments could be made to estates.
However, DWP has identified around 15,000 cases where it is thought unlikely it will be able to trace the pensioner or heirs. Because records for the deceased are generally destroyed within four years, the true number who were underpaid before they died is likely to be far higher.
The split of those affected is:
The NAO report reveals that the biggest error found to date was an underpayment of £128,000 and errors go back as far as 1985. About 1 in 8 arrears payments so far is for £40,000 or more.
The investigation also found that DWP still has no agreed plan for dealing with deceased cases
The report says that the rules of the old state pension system are ‘only understood by a small group of specialists’ and that the DWP ‘quality assurance’ processes were inadequate.
Because DWP have moved staff from processing new claims onto this exercise, there is a large backlog on new state pension claims. According to the NAO report DWP normally have around 40,000 live (uncompleted) new state pension claims on the go, but in July 2021 this had increased to 80,000.
Steve Webb, partner at LCP, said: “This report highlights the fact that DWP failed to act over a period of many years when errors were found in state pension assessments. Tens of thousands of married women, widows and the over 80s have been underpaid, with arrears in some cases exceeding £100,000. It is very worrying that errors are still being made as part of the correction exercise, where the highest standards of quality control should be in force. DWP also needs to do everything it can to track down the families of pensioners who have sadly died and never received the pension they were due. We now need full transparency from DWP about the correction process, with regular updates and a full explanation of exactly which cases are being reviewed. It should also explain how these errors were allowed to go on for so long and what lessons have been learned.”
