Pensions  

DWP to consider remedies after pension mispayments

DWP to consider remedies after pension mispayments

The DWP has said it is investigating remedies after millions of people have received the wrong pension for decades because of government IT failures. 

National statistics published last month by the DWP suggested that 23 per cent of pensioners were underpaid, while 17 per cent were overpaid.

Reporting by the BBC this morning revealed that the errors, which remain uncorrected, have been known about since the 1990s.

Former pensions minister Steve Webb has told FTAdviser that while DWP pension mispayments sound tiny, they may have resulted in pensioners losing out on other state benefits.

“It’s not so much the pennies on the pension, it’s the knock-on effect on other things,” he said. 

Webb gave the example that an individual may have only been overpaid the state pension by 5p a week, but this may have put them over the limit for receiving pension credit, meaning that the individual wouldn’t have qualified for things like cold weather payments and help with their fuel bill. 

A decision was made by DWP officials in 2002 that it would be too complicated to fix the problem, which mostly affected an element of the state pension known as the graduate retirement benefit.

A DWP spokesperson told FTAdviser this morning that the legacy IT issue responsible for the problem is decades old and successive governments had not corrected it. 

The spokesperson said: “Our priority is ensuring every pensioner receives the financial support to which they are entitled and most graduated retirement benefit awards are correct.

“Where they are not, the vast majority of over and under payments are of 1p or 2p per week and we are looking at solutions to this issue which has occurred under successive governments.”

Webb said he was never made aware of the problem and described the errors as “astonishing”.

“The story raises serious questions about transparency and accountability within the DWP. It also prompts questions about how many other errors are simply ‘swept under the carpet’ and never admitted. 

"DWP now needs to come clean over the scale of this problem as well as any other errors which have never been disclosed.  Parliament will expect a written statement from the minister at the earliest opportunity with a full explanation,” he said. 

The statistics published last month included reference to a full review of state pensions for FY 2022, the first time one has been undertaken since FY 2006.

The DWP said this process, which included an opportunity to directly contact customers, revealed “some types of official error” being identified within the statistics for the first time. 

The graduated retirement benefit is an addition to the basic state pension for those who worked between 1961 and 1975 and was a forerunner of SERPS, the state earnings-related pension scheme.

Separately, FTAdviser has previously reported that ‘years of human error’ led to a £1bn pension underpayment, affecting 134,000 pensioners with an average underpayment of £8,900 each.