£3 billion bill for women’s pensions

THOUSANDS of women who were underpaid the state pension are in line for top-ups, with the bill put at around £3 billion.

An administration error identified in March 2020 suggested some people had been underpaid, according to Office for Budget Responsibility (OBR) documents.

Underpayments affected married women whose husbands reached pensionable age before 2008 and who were unknowingly entitled to an “enhanced pension” that would have boosted their payments by up to 60 per cent.

Department for Work and Pensions (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 since 2008.

A repayment programme started in January this year.

The report said: “Our forecast reflects an initial estimate that it will cost around £3 billion over the six years to 2025/26.”

It warned that the costing “is subject to a high degree of uncertainty as the true extent of the underpayment is not yet established”.

Sir Steve Webb, a former pensions minister who is now a partner at pensions consultants LCP (Lane Clark & Peacock), which has previously heard about some refunds amounting to more than £30,000, said: “This figure is truly mind-numbing. When I first looked into this issue a year ago I had no idea it would explode into such a huge issue.”