State PensionJul 5 2021

NAO launches investigation into underpaid state pensions

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NAO launches investigation into underpaid state pensions
ByAmy Austin

The National Audit Office (NAO) is to investigate the issue of underpayments of the state pension to women, looking at how it happened and what is being done to resolve it.

According to the NAO, the investigation is scheduled for Autumn 2021 and will look at who has been underpaid and why, how this happened, what the Department for Work and Pensions is doing to put it right and what lessons it has learned. 

The DWP was made aware of underpayments of state pension relating to entitlements for certain married people, widows and the over-80s dating back to 1992 after it was raised by pension consultants LCP back in May 2020.

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 March 17, 2008, this uplift should have been applied automatically. Prior to 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 that tens of thousands of married, divorced and widowed people may have been affected.

The DWP began making repayments in January 2021. 

As part of the Budget in March, the DWP estimated it will cost £3bn over the next six years to address the issue but pensions minister Guy Opperman subsequently said this number could change.

In a written statement from April, Opperman admitted the government was aiming to pay back everyone who had been underpaid by “the end of 2023”.

To pay them back quickly, it is looking to more than triple the number of staff it has working on this issue, from 150 to 510.

A DWP spokesperson said: “The action we are taking now will correct the historical underpayments that have been made by successive governments and anyone impacted will be contacted by us to ensure they receive all that they are owed.”

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