The Department for Work and Pensions has paid out nearly £572mn in state pension underpayments but critics say there is still a long way to go.
DWP data showed that between January 11, 2021 and February 29, 2024 there were 97,016 underpayments identified, owing a total of £571.6mn.
But the Office for Budget Responsibility has previously estimated the correction exercise could eventually cost the DWP almost £3bn.
Tom Selby, director of public policy at AJ Bell, said: “The news that the DWP has now identified over £570mn in state pension underpayments is undoubtedly positive for the progress of its correction exercise, though there remains a long way to go if the near £3bn in expected total costs are to be reconciled and sadly that means many more of those affected will still be awaiting payment.
“This saga is particularly tragic as many of the people affected will have been struggling unnecessarily for years. What’s more, the National Audit Office (NAO) has previously estimated around 40,000 of the people who were due a repayment had died without receiving it.
“It is absolutely critical all those affected by this scandal receive the money they are owed as quickly and efficiently as possible.”
State pension underpayments
The issue of state pension underpayments relates to entitlements for certain married people, widows and the over-80s dating back to 1992.
It largely affects women retiring under the old state pension system. Many did not receive the state pension they were entitled to under their husband’s national insurance record.
Under the old system, married women could claim a basic state pension at 60 per cent of the full rate based on their husband's contributions, assuming this would be a greater amount than the pension they would receive from their own contributions.
Since 2008 this uplift should have been applied automatically. Before this date, a married woman had to make a 'second claim' to have her state pension increased when her husband turned 65 - and many women did not make such claims.
Subsequent DWP investigations uncovered systematic issues meaning tens of thousands of married, divorced and widowed people may have been affected.
The DWP began making repayments in January 2021.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said while progress was being made to repay people, it was happening very slowly.
“People have the expectation that the state pension they receive is correct but a series of errors in an already overly complicated system means that for many thousands of people this expectation has been incorrect.
“Some who queried the issue with DWP over the years were told there was no problem, and many have suffered real financial hardship as a result. These people have been let down and need resolution as soon as possible.”
A DWP spokesperson said: “The action we are taking now is correcting historical underpayments made by successive governments.
“Our priority is ensuring pensioners receive the financial support to which they are entitled and we have set up a dedicated team and devoted significant resources towards completing the correction exercise.”
amy.austin@ft.com
