DWP urged to expand state pension correction exercise

The Department for Work and Pensions (DWP) has been urged to expand its state pension correction exercise, after the discovery of underpayments of up to £60,000 to divorcees in some cases.

LCP has written to DWP permanent secretary, Peter Schofield, to call on the government to review its decision to exclude divorced people, suggesting that, given the complexity of the state pension rules for divorcees, there is actually more potential for error in these cases.

The DWP previously said that there is no need to review the position of divorcees as part of its current exercise, suggesting that there is no “significant evidence” of errors amongst this group.

However, figures published by DWP in October 2021 revealed that there are 720,000 divorced women receiving the old state pension, with 40,000 of these not getting the standard rate for a married woman, currently £82.45 per week.

In addition, LCP pointed out that a divorced woman can in some cases get up to a full basic pension, around £137.60, using her ex-husband’s contributions, suggesting that "well over 100,000 cases may be worth checking", as a 1 per cent error rate would imply 10s of millions of pounds in underpayments.

The consultancy also flagged a “growing number” of individual case studies that have been identified where divorced women have been underpaid because of DWP errors.

LCP partner, Steve Webb, commented: “Given the large-scale errors on state pensions for widows, married women and the over 80s, it seems implausible that DWP has an unblemished record when it comes to the pensions of divorced women.

“A series of individual cases has highlighted blunders which have led to divorced women being underpaid by tens of thousands of pounds, in some cases for a decade or more.

“The department has dismissed concerns around this group far too lightly and should take another look to assess the scale of the problem and then take action to put things right”.

Commenting in response, a DWP spokesperson said: “We encourage people to contact us if they get divorced or their civil partnership is dissolved and every year we remind people about doing so alongside the uprating notifications we send out.

"We want everyone to claim the benefits to which they may be entitled and we urge anyone of state pension age – or their family and friends – to check if they are missing out on financial support.

"We apologise for the errors in the cases identified and have corrected our records and paid the arrears owed."

The DWP has also previously emphasised that it is "determined" to rectify state pension underpayments by the end of 2023, stating that "lots of lessons" had been learned from the issue.

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