£94.3m paid so far to address state pension underpayments

The Department for Work and Pensions (DWP) has confirmed that it has repaid £94.3m to individuals impacted by historical state pension underpayments as of 28 February 2022, having undertaken 58,809 reviews.

The problem affected married women whose husbands reached pensionable age before 2008, as well as widows and those over 80, who were unknowingly entitled to an 'enhanced pension' that would have boosted their payments by up to 60 per cent.

According to an update from the DWP, between 11 January 2021 and 28 February 2022, the checking process has identified 14,239 underpayments, with around £37.9m paid to 5,122 married women, £33.9m to widows and a further £22.5m to over 80s.

Pensions Minister, Guy Opperman, also updated the House of Commons on the state pension correction activity that is addressing historical errors, which were “unaddressed by successive governments”, in a recent written statement.

He said: "We are fully committed to ensuring that any historical errors are addressed as quickly as possible, to ensure that individuals receive the state pension they are rightfully due in law.

“As of 28 February 2022, we have undertaken 58,809 reviews, repaid £94.3m, and informed individuals of how much they will be receiving in arrears and the reasons for the change to their state pension rate.

“The department now has a dedicated team of over 500 people working on the correction activity and, recognising the scale and complexity of the activity, we will continue recruiting.”

Despite the plans for increased recruitment, however, DWP's latest update has cast doubt as to whether the exercise is on track to be completed by the end of 2023, as previously projected, with the amount repaid so far equal to around 10 per cent of the estimated total state pension underpayment.

Indeed, the National Audit Office previously estimated that the DWP has underpaid over £1bn in state pension payments to around 134,000 pensioners, whilst the Office for Budget Responsibility predicted costs of around £0.7bn in 2021-22 alone in order to address the underpayment of women's state pensions.

The DWP has also recently faced further scrutiny over its handling of state pension underpayment issues, after a report from the Public Accounts Committee (PAC) described the situation as a "shameful shambles", while industry experts have also called for the correction exercise to be expanded to include divorcees.

The department has stressed that "lots of lessons" were learned from the official underpayment of state pensions, however, repeatedly committing to addressing this issue, and offering an apology to those impacted.

Issues around the underpayment of state pensions were first highlighted in March 2020 by LCP partner, Steve Webb, after a freedom of information request revealed that "tens of thousands" of women were not receiving the correct state pension uplifts.

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