NAO launches investigation into underpaid state pensions

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 pensions relating to entitlements for certain married people, widows and the over-eighties dating back to 1992 after it was raised by pensions consultancy 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 yearsto address the issue, but pensions minister Guy Opperman subsequently said this figure could change.

In a written statement in April, Opperman admitted that 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, to 510 from 150.

In previous comments, the DWP has said the action it is taking 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”.

The DWP has been approached for comment.

This article originally appeared on FTAdviser.com