Pensions  

DWP called to intervene in divorced womens’ underpaid pensions

DWP called to intervene in divorced womens’ underpaid pensions

A bill calling on the government to include divorced women in its efforts to repay thousands of individuals who have been underpaid the state pension, has been introduced in parliament.

The State Pension Underpayments (Divorced Women) bill had its first reading in the House of Commons this week (March 8).

The bill, which was brought by Liberal Democrat MP Sarah Green, is looking to “expand the scope of the legal entitlements and administrative practice exercise to correct state pension underpayments to include underpayments to divorced women”.

The Department for Work and Pensions has previously estimated it has underpaid 134,000 pensioners, mostly women, more than £1bn of their state pension entitlements, with some of the errors dating as far back as 1985.   

Pensioners affected are those who first claimed the state pension before April 2016 and who do not have a full National Insurance record, or who should have inherited additional entitlement from their deceased partner.

However, divorced women have not been included in the DWP’s correction exercise.

Some believe there could be further errors detected in relation to these women.

They include two groups:

  • Women who were divorced at point of retirement and where their pension failed to take account of the contributions of their ex husband; and
  • Women who divorced post retirement and notified DWP but whose pension was never reassessed.

Steve Webb, partner at LCP, said: “The state pension rules around divorced women are highly complex and it seems to me inconceivable that DWP is getting all of these calculations right, especially given that they managed to get relatively simple matters wrong like paying the over 80s rate to people over 80.  

“On that basis I firmly believe that DWP should include this group in the systematic checking process that they are now undertaking”.

The DWP state pension correction exercise currently covers checking for errors for three groups:

  • Widows, whose state pension was never reassessed when their husband died;
  • Married women whose husband turned 65 after March 17 2008 and who never got an automatic uplift to the 60 per cent ‘married woman’s rate’; and
  • Over 80s who never got an automatic uplift to the 60 per cent ‘over 80s’ rate.

The bill was put forward this week in the form of a ‘Presentation Bill’, which Webb said was a way a group of MPs can raise an issue that could be tackled by legislation. 

It is a form of Private Member’s Bill and because it has been tabled so close to the end of the session, it does not actually have a chance of becoming law right now, Webb added.

But he said at least it would put this issue on the parliamentary agenda.

A DWP spokesperson said: "Those who have become divorced or whose civil partnership is dissolved are required to report changes of circumstance to ensure they receive the correct amount of State Pension, and every year we remind people about doing so alongside the uprating notifications we send out.

"We are carefully considering the content of the Public Accounts Committee’s report on this matter and will respond formally in due course.”

State pension errors

Back in January, the Public Accounts Committee called for the government’s state pension payment system to be overhauled and underpayments to be treated more seriously, while warning that other errors could still be unidentified.

Its report, ‘Underpayments of the state pension’, highlighted a number of areas where the government needs to make changes to ensure maladministration and underpayment issues do not continue.