"If DWP refuses to accept the Ombudsman’s recommendation and refuses to establish a redress scheme, there is no chance that this position will hold."
- Steve Webb, partner at LCP and former pensions minister
A new report from the Parliamentary Ombudsman says women born in the 1950s and hit by state pension age changes are owed compensation.
The report says Parliament should introduce a redress scheme for women who were not properly informed of changes in their state pension age.
It has suggested payouts of between £1,000 and £2,950 for women who had been ill-informed and impacted by the process of bringing women's retirement age into line with men's, which was accelerated from 2010.
The Ombudsman’s report shows that following the further changes in 2011, over 5 million individual letters were sent out, but that no letters were sent out in the years which followed the 1995 Act, including when DWP were aware of low levels of public awareness of the changes.
The Women Against State Pension Inequality (WASPI) campaign was founded in 2015 to secure compensation for failures to inform women born in the 1950s about the pension age moving from 60 to 66. Statista analysis in 2022 found that 220,190 affected women died in the seven years since the campaign started.
Whilst the Ombudsman says that compensation for maladministration should ideally reflect each person’s individual case, it recognises that this would be very difficult where millions of people are affected.
He therefore suggests flat rate compensation – provisionally in the range of £1,000 - £2,950.
Steve Webb, partner at LCP and former pensions minister, commented: “If DWP refuses to accept the Ombudsman’s recommendation and refuses to establish a redress scheme, there is no chance that this position will hold. Particularly during an Election year, the Government will struggle to secure a majority for ignoring the Ombudsman’s report.
"Instead DWP should respect the Ombudsman’s conclusions, which have been carefully considered over many years, and should come up with a redress scheme for their failure to notify women of sometimes life-changing increases in their state pension age.”
Lily Megson, policy director at My Pension Expert, added: "The DWP is playing for time that it just doesn't have. It's promising to respond to the Ombudsman’s report in "due course", but if this process drags on then pressure will only grow on the government to offer suitable compensation to those affected.
"Ultimately, this case demonstrates the importance of clearer communication around pension policies. When reforms are introduced, consumers need to be made well aware of what the changes entail and how they will impact their finances. A crucial part of this – one that is so often overlooked – is opening up better pathways so people can seek out financial information, guidance and advice.
"The government may fall back on the excuse that it provides suitable warning over changes to the state pension age, but the truth is that people need much, much more support in understanding the rules that govern their pensions and retirements. Hopefully today's report is the wake-up call the government needs to develop a robust strategy for improving pension engagement and education around financial planning, including the value of independent advice."
A DWP spokesperson said: “We will consider the Ombudsman’s report and respond in due course, having cooperated fully throughout this investigation.
“The government has always been committed to supporting all pensioners in a sustainable way that gives them a dignified retirement whilst also being fair to them and taxpayers.
“The State Pension is the foundation of income in retirement and will remain so as we deliver a further 8.5% rise in April which will increase the state pension for 12 million pensioners by £900."
