" These cases may well be the tip of an iceberg, with many thousands of people potentially underpaid. "
- Steve Webb
A new category of widows and widowers could be affected by DWP errors, according to former pensions minister and LCP partner Steve Webb.
Since 2021, DWP has been undertaking a correction exercise designed to fix previous state pension errors relating to three groups, including widows/widowers. As of 31st March 2024, over £280m has been paid in arrears to around 23,000 widows who had wrongly missed out on inherited state pension from a late husband, wife or civil partner. With the correction of historic errors for widows set to run to the end of 2024, DWP estimates that the total amount paid out could be more than double this figure, at around £650m to over 50,000 widows in total.
New errors
However, Webb has now identified a new group of cases where DWP appears to be making errors. These are people claiming the new state pension who were already widowed when they retired. He has recently been contacted by four separate people who had not been awarded any inherited state pension when they retired and had been told in writing or over the phone by DWP that they were not entitled. In all four cases, this was incorrect. An increased amount of state pension has been put into payment and arrears have been paid.
Who is affected?
The group most affected are those who are widows or widowers at the point when they claim their new state pension and where the late spouse either reached pension age or died before 6th April 2016.
In this case, the widow or widower can potentially inherit at least 50% of any ‘additional state pension’ which the late spouse built up, plus 50% of any ‘graduated retirement benefit’.
The exact amount of inherited state pension will depend on individual circumstances, but will be greater if the late spouse was an employee (rather than self-employed) and the widow is not receiving a widow’s pension from a company pension scheme (as this may replace part of any inherited state pension due).
More generally, the amount of inherited state pension anyone is due can depend on things like:
- Whether the claimant comes under the old or new state pension system,
- Whether the late spouse came under the old or new state pension system,
- When the late spouse died,
- Whether the late spouse was a member of a ‘contracted out’ occupational pension scheme.
Steve Webb commented: “Having had to spend years checking hundreds of thousands of historic state pension calculations for errors, you would hope that DWP would be making sure that new claims are handled correctly. But we have found worrying evidence that this is not the case.
"There seems to be a particular problem for people who are widows or widowers when they claim their state pension. In some cases DWP seems to have failed to automatically add any inherited state pension they were due from a late partner. These cases may well be the tip of an iceberg, with many thousands of people potentially underpaid. The Department needs to launch an urgent investigation into the scale of this problem.”
