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Historic IT blunder means millions paid wrong pension for decades

Paloma Kubiak
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Paloma Kubiak

Millions of pensioners have been receiving the wrong amount of income due to an IT problem first discovered in the 1990s but which has just come to light.

The Department for Work and Pensions (DWP) said it is investigating remedies to historic IT issues which mean some people have been both overpaid and underpaid in different years, according to the BBC report.

It is understood the vast majority of errors (98%) are worth one or two pence per week, with all errors under 10p per week.

The problem relates to the ageing and “not fit for purpose” Pension Strategy Computer System, which inaccurately uprated the Graduated Retirement Benefit (GRB) paid in addition to the basic state pension for those who worked between 1961 and 1975.

While the department reportedly become aware of the IT blunder in the 1990s, a solution has yet to be found under successive governments.

This latest revelation comes on top of DWP admitting it had underpaid over 130,000 people – overwhelmingly women – over a period of decades, totalling £1bn.

The correction exercise for these cases is expected to take until the end of 2023, with more than 500 civil servants employed to get the error fixed.

And just in April, it was revealed that six more state pension blunders had been made by the DWP.

‘Raises serious questions about transparency and accountability’

Lane, Clark and Peacock partner, and former pensions minister, Steve Webb, said: “Although the errors are typically small, this could have knock on effects, perhaps wrongly depriving some people of much larger amounts in means-tested benefits such as Pension Credit.

“This story raises serious questions about transparency and accountability within the DWP. It also prompts questions about how many other errors are simply ‘swept under the carpet’ and never admitted.

“DWP now needs to come clean over the scale of this problem as well as any other errors which have never been disclosed. Parliament will expect a written statement from the minister at the earliest opportunity with a full explanation.

‘Most Graduated Retirement Benefit awards are correct’

A DWP spokesperson said: “Our priority is ensuring every pensioner receives the financial support to which they are entitled and most Graduated Retirement Benefit awards are correct.

“Where they are not, the vast majority of over and under payments are of 1p or 2p per week and we are looking at solutions to this issue which has occurred under successive governments.”