Scandal of £670m underpaid due to pension ‘errors’
AN “EYE-WATERING” £670million was not paid out to people on state pensions last year, mainly because of admin mistakes.
The Department for Work and Pensions yesterday blamed “official error” for most of the underpayments.
The £670million in 2022-23 compared with £540million in 2021-22.
And the scandal has sparked calls for urgent action to improve standards.
Former pensions minister Sir Steve Webb, now a partner at consultants Lane Clark & Peacock, said: “The continuing scale of state pension underpayment is truly shocking.
Confidence
“Whilst it is right there is a focus on fraud in the benefit system, DWP should be equally concerned where it is not paying people what they are entitled to.
“Urgent action is needed to drive standards of administration – so pensioners can have confidence that the pension they are being paid is correct.”
Helen Morrissey, head of retirement analysis at financial service company Hargreaves Lansdown, described the £670million underpayments figure as an “eyewatering”. But she added: “This perhaps up comes as no surprise given the huge exercise the DWP is undergoing to correct historical errors that meant many people did not receive uplifts to which they were entitled.” The DWP said of the £670million underpaid, £580million was down to official error, including failure to act on changes to marital status or at age-related trigger points. Other issues included incorrect recording of national insurance contributions and pensions not being uplifted for people who had been widowed and were entitled to amounts inherited from their spouses. The remaining £90million was underpaid because of errors by people claiming pensions, the department said. Meanwhile, the share of claims that were overpaid was just two in every 100.
The DWP said: “Our priority is ensuring pensioners receive the financial support to which they are entitled.Where errors do occur, we are committed to fixing them as quickly as possible.”
The department’s spokesman added it has also taken action to correct historical underpayments and aims to address them as quickly as possible.