FIGHT for your PENSION!
As MPs lambast DWP for failing thousands of women, our essential guide to getting what you’re owed...
THE Pension Service has a long way to go to win back the public’s trust after its handling of a £1billion underpayments fiasco, it is warned today. Writing in Money Mail, Dame Meg Hillier, chairman of Parliament’s public accounts committee, says the repeated blunders have undermined confidence in state pension payments.
The Department for Work and Pensions (DWP) has faced a barrage of criticism over the scandal, which saw 134,000, mostly women, miss out over decades.
A damning report by the public accounts committee last week said the department had been complacent, reluctant to reveal the scale of the scandal and had since showed little interest in putting things right.
Today, Money Mail dives into the report, and gives you some of the answers the DWP has failed to provide.
WIVES WHO’VE MISSED OUT
THE SCANDAL hit mostly women who should have had their pensions upgraded by the DWP without having to ask. Those affected reached state pension age before April 2016.
They include wives entitled to a pension worth 60 pc of their husband’s basic rate, and also divorcees and widows who could claim as much as 100 pc.
Others hit also include pensioners who should have been paid the minimum 60 pc of the basic state pension after turning 80.
The DWP has said it will contact all pensioners who did not have their pensions automatically upgraded. Yet this means anyone who is entitled to a better pension but has to claim it themselves will continue to lose out.
This includes wives whose husbands reached state pension age before March 2008.
The DWP admitted many pensioners would be underclaiming and need to contact the department. But MPs said it was difficult for people to know what to do.
The report warns: ‘These pensioners need clearer information to act, or risk missing out on significant sums.’
Sir Steve Webb, the former pension minister who uncovered the scandal, has spoken to thousands of concerned pensioners. He says: ‘One consistent theme is the lack of easy-to-understand official information on how the system works. More needs to be done to make sure everyone gets their full entitlement.’
FINDING FAMILY
MORE than 10,000 pensioners died without receiving the money they were entitled to. MPs criticised the DWP for having no proper plan to contact relatives.
The report says the department’s priority was living pensioners
rather than the deceased, despite the fact their next of kin could be financially vulnerable.
MPs said the department needed to improve ‘the clarity and availability of information’ on underpayments, including details useful to relatives of pensioners who had since died.
LOST INTEREST
PENSIONERS who missed out have been handed lump-sum back payments of up to £128,000. The average is close to £9,000.
Under government guidelines, departments must put mistakes right and do as much as possible to ensure those who missed out are not worse off as a result.
This means those who are owed money are usually paid interest on the amount — to reflect what they could have had if it had been saved or invested. The DWP paid interest of around 0.5 pc on back payments up until January last year, but has since refused to do the same for others.
The department says it made the decision in line with previous correction exercises.
But Sir Steve, now a partner at pension consultancy LCP, says this was ‘impossible to justify’.
He says: ‘I’ve spoken to people whose retirement has been blighted by a reduced pension, and making back payments now doesn’t put things right.’
SHOCK BILLS
THE DWP has been handing out large lump sums without considering how it will affect those relying on support, MPs say.
A windfall of more than £16,000 can mean pensioners no longer qualify for housing benefit or council tax deductions. And the elderly are no longer entitled to help with care funding if they have more than £23,250 in the bank.
Yet the committee report says: ‘The department has demonstrated little interest in accounting for financial consequence of a lump sum... and considers it to be the pensioner’s responsibility to advise the authorities.’
Sir Steve says he had spoken to one pensioner whose council tax help stopped after they received their back payment. others fear they will lose care funding.
Short-changed Money Mail readers also say they have had no information about tax due on their back payments — with even tax advisers struggling to get answers. Sir Steve says tax will be due, but only on the past four years’ worth of back payments.
He also says the money will be taxed as if you had received it as weekly pension income.
HOW TO CHECK
THE basic-rate state pension currently pays £137.60 a week, so someone on a 60pc rate should receive around £82.45 a week.
Wives are entitled to the 60pc rate from the day their husband reached state pension age.
However, a rule change in March 2008 required the DWP to automatically pay the increased pension.
Wives who reached state pension age before then had to claim the extra themselves. Those who were unaware can upgrade, but can’t claim all the missed money.
The DWP says those whose husband became entitled to their state pension on or after March 17, 2008, do not need to take any action, and will be contacted.
Sir Steve has also called on the department to ensure divorcees are included in the £23million correction. Figures show there are 40,000 divorcees on the old state pension receiving less than £82.45 a week.
The DWP says fixing the scandal is a ‘priority’. A spokesman says: ‘We have set up a dedicated team and devoted significant resources to processing outstanding cases, and have introduced new quality control processes and improved training to ensure this doesn’t happen again.’
YOU can use this online calculator to find out if you’ve been short-changed: pension underpaid.lcp.uk.com. If you believe you are missing out, call the Pension Service on 0800 731 0469 or write to: The Pension Service, Post Handling Site A, Wolverhampton, WV98 1AF.