210,000 People May Be Owed £5,000 Each Due to State Pension Errors, Says DWP

The Department for Work and Pensions (DWP) has admitted to a significant error that led to £1.3 billion in State Pension underpayments, potentially affecting 210,000 pensioners. The affected individuals, mostly women, are owed an average of £5,000 each due to historical mix-ups in pension calculations. This revelation follows a similar error reported in 2022, which saw 165,000 pensioners underpaid by £1.2 billion.

The DWP has committed to addressing these mistakes, but the situation has raised concerns over the department’s ability to manage pensions accurately and prevent fraud and errors.

Who Is Affected?

The underpayments primarily involve pensioners who were not paid their full entitlement due to calculation errors.

• Affected Demographic:
  • The majority of those impacted are women who may have missed out on certain pension entitlements due to outdated rules or errors.
  • On average, each affected pensioner is owed £5,000.
• Timeframe:
  • These errors occurred over many years, leading to substantial cumulative losses for pensioners.

PAC

The Public Accounts Committee (PAC) criticized the DWP for its handling of pension payments.

Key Points:

1. Inadequate Oversight:
   • PAC Chair Dame Meg Hillier accused the DWP of being “asleep at the switch,” resulting in pensioners being “significantly out of pocket.”
   • The committee urged the department to improve its systems to detect and address underpayments promptly.
2. Fraud and Errors in Benefits:
   • Fraud and error in benefit spending remain “unacceptably high,” with £8.2 billion overpaid in the latest financial year, compared to £4.4 billion in 2019-20.
   • Of this, £6.4 billion was attributed to benefit fraud.
3. Counter-Fraud Measures:
   • The DWP has allocated £895 million to combat fraud and aims to save taxpayers £600 million over the next five years.
   • A £443 million project will review 8 million live Universal Credit cases to correct errors.

DWP’s Response

The DWP acknowledged the errors and outlined steps to rectify the situation:

• Fixing Underpayments:
  • The department is committed to ensuring affected pensioners receive the money they are owed.
  • State Pension underpayment rates due to official errors remain low, at 0.5% of expenditure, according to a DWP spokesperson.
• Fraud Prevention:
  • The DWP is using new powers to combat fraud, targeting high-risk areas like Universal Credit.
  • The department aims to implement PAC’s recommendations and provide a comprehensive response to the report.

What Can Pensioners Do?

If you suspect you are affected by the underpayments:

1. Check Your Pension Records:
   • Verify your payments against entitlement rules.
2. Contact the DWP:
   • Reach out to the State Pension helpline for assistance.
3. Monitor Updates:
   • Stay informed about the DWP’s actions to resolve these errors.

Moving Forward

While the DWP works to rectify these errors, the situation underscores the need for more robust oversight of pension and benefit systems. Addressing historical underpayments and preventing future errors will require significant improvements in the department’s processes, along with greater transparency and accountability.

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