£13k windfall for women in state pension scandal
Around 200,000 women will receive letters to say they are owed an average £13,500 windfall due to state pension admin blunders dating back nearly 30 years.
Budget documents yesterday revealed that the scandal will cost the Department for Work and Pensions an estimated £3billion to rectify.
A dedicated team of 155 civil servants is now working through hundreds of thousands of files to trace every woman affected and pay them money owed. But the laborious task could take six years.
The scandal relates to the failure to pay automatic increases to the state pensions of wives, widows and the over-80s.
Women who retired under the old state pension system before April 6, 2016, are entitled to claim a rate equivalent to 60 per cent of their husband’s basic state pension. The DWP was supposed to pay this automatically from March 2008.
Widows are also entitled to the same state pension their late husband received, and the over-80s should all be receiving at least a 60 per cent state pension.
The current basic state pension pay is £134.25 a week, so married women should be receiving at least £80.45 every week.
Former pensions minister Sir Steve Webb last year estimated tens of thousands of women had missed out, but the true scale of the scandal emerged only last night. A report from the Office for Budget responsibility revealed the DWP would have to put aside £3billion over the next six years. It is understood around 200,000 women are owed £2.7billion in all – an average of £13,500 each.
The paper read: ‘DWP investigations between May and December 2020 uncovered a systematic underpayment of state pensions, meaning tens of thousands of married, divorced and widowed people may have been underpaid.’ It is understood the families of women who have since died will be paid what they were owed. But arrears will not have any interest added. Sir Steve, now a partner at pensions consultancy Lane Clark & Peacock, said the scale of the scandal was ‘truly mind-numbing’. He said: ‘When I first looked into this a year ago I had no idea it would explode into such a huge issue. It is truly shocking 200,000 women have been underpaid such huge sums.’ The first letters went out in January, and the DWP says it will contact all the women owed money.
Great-grandmother Jean Hayes, 75, should have had her pension automatically increased from £60.72 a week to £77.45 when her husband richard, 77, retired in 2008. It was only last year that the DWP admitted she had received a lower rate for 12 years and paid her £8,822.41 as a result. She said: ‘The Government has let down a generation of women with this issue.’