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More than £1bn yet to be paid back after government pension blunders

Rebecca Goodman
Written By:
Rebecca Goodman

The government has paid back £300million to 46,000 people since it started correcting errors on underpaid state pensions in January 2021.

However, it is estimated that the total amount due back is £1.46bn to 237,000 people and, at the current rate, it may not be until 2026 when all payments are made.

These payments have been made after government errors meant that many people, mainly women, were not paid the state pension they were entitled to after their husbands retired or died.

The Department for Works and Pensions (DWP) is now being urged to dedicate more time and staff to this area to correct underpaid pensions given that many people are struggling with the rising cost of living.

There have been several government blunders with pension payments. They include a historic IT problem which meant millions were being underpaid their state pension for decades and the DWP underpaying around 130,000 people (mainly women).

Last April, six more government errors were also exposed, after a freedom of information request by former pension minister, Steve Webb.

More than £1bn still to be tracked down

The latest update from the DWP which shows how much has been repaid and how many cases have been reviewed relates to three categories:

  • Married women who missed an uplift to their pension when their husband retired
  • Widowed women who missed an uplift when their husband died
  • Men and women aged over 80 who missed an uplift when they turned 80, also known as ‘Category D pensioners’

From these, a total of £300million has been paid back to just over 46,000 people. This is an average of £6,400 per person.

But Webb points out that the latest DWP annual report from summer 2022, estimated that the total amount which would eventually have to be paid would be £1.46 billion to 237,000 people.

This leaves more than £1bn still to track down by the government to around 190,000 people who received or are still receiving the wrong pension.

‘Slow progress’ with making underpayments

Webb also said progress has been slow so far. He said the previous update, from November 2022, showed that at the end of October 2022 just over £200m had been paid out. Based on these figures, Webb estimates that the task may not be completed until late 2026.

He said: “The scale of these state pension errors is so great that DWP still has a billion pound mountain to climb in terms of identifying underpayments and putting them right.

“It is vital that the Department devotes extra resources to make sure that huge numbers of people are moved on to the correct rate of pension as a matter of urgency.

“With the current cost of living crisis it is hard enough for older people to cope, without having to get by on a pension which is too low due to official error”.

Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, added: “The issue mainly affects women retiring under the old state pension system.

“Some were unaware of the problem but many who queried the issue with DWP over the years were told there was no issue with many enduring real financial hardship as a result. These women have been let down on a gigantic scale and need resolution as soon as possible.”