DWP state pension error as thousands owed up to £11,725 in underpayments

The Department for Work and Pensions (DWP) has released its latest figures on state pension errors, with hundreds of millions of pounds having been paid in arrears to those who were underpaid

The Department for Work and Pensions (DWP) has released a significant update about state pension errors that have resulted in thousands of people being underpaid. The DWP is currently investigating two sets of so-called correction exercises.

The first correction exercise is about married women whose state pension was not automatically increased when their husbands retired, widows whose state pension was not automatically reassessed, and individuals over 80 with low state pensions. The DWP began investigating these specific errors in January 2021.

New figures published today reveal that £804.7million has been disbursed. In total, it was discovered that 130,000 people were underpaid - including 50,261 widowed individuals, 47,004 married women, and 33,683 over-80s with low state pension income.

The average arrears for widowed women stands at £11,725, while married women have received an average of £5,553 back. The average award for those over 80 is £2,203.

The second correction exercise, initiated in January 2024, concerns mothers who claimed Child Benefit before 2000 and may be lacking Home Responsibilities Protection on their National Insurance record. This could mean they are not receiving the correct amount of state pension, as entitlement is dependent on your National Insurance record, reports the Mirror.

HM Revenue & Customs has issued over 370,000 notifications to individuals potentially affected by the state pension shortfall, processing more than 42,000 claims. Approximately 19,000 of these have been forwarded to the Department for Work and Pensions (DWP), with over 5,000 cases confirming underpayments.

To date, they have dispensed £42 million in back payments, averaging £7,859 per individual. Sir Steve Webb, ex-pensions minister and current LCP partner, said the accumulative arrears for both correction exercises now amounts to £846 million. This includes adjustments from a previous Home Responsibilities Protection correction exercise identified by Sir Steve himself in 2008, which resulted in £83 million paid to 36,000 recipients.

Factoring in this earlier rectification, the grand total rectified due to state pension errors is £929 million. The compensation figures associated with the present Home Responsibilities Protection correction are predicted to increase further, with additional updates anticipated shortly.

Sir Steve commented to say: "We have become so used to stories about state pension errors that it is easy to become dulled to the scale of what went wrong. It now looks as though the total amount underpaid will pass through the £1 billion mark this year with over 170,000 people having lost out.

"The vast majority of those who lost were women, some of whom were underpaid for decades or even went to their grave never paid the right state pension. The remaining corrections need to be handled as a matter of urgency. This should never be allowed to happen again."

Rachel Vahey, head of public policy at AJ Bell, said: "This is one of the biggest benefit scandals of modern times. DWP miscalculations have left thousands of pensioners – mainly women – short on their state pension payments. The DWP has obviously been hard at work over the last six months, identifying another 11,000 cases of underpayment, which has ratcheted the bill up from £736 million to a staggering £805 million today."

Vahey added: "But despite this progress, this appalling situation is not yet resolved. The DWP has confirmed they have completed the vast majority of reviews, but it will take another two years, to the end of March 2027, before all cases are resolved."