A report by the National Audit Office (NAO) reveals that around 1.05bn worth of UK state pensions has not been paid by the DWP with claims that some people were denied payments of as much as £100,000.
The report by the public spending watchdog stated that the errors happened because state pension rules were ‘complex’, IT systems ‘outdated and not automated’, and the administration of claims required a high degree of manual review and understanding by case workers.
The NAO state that of those affected a majority are likely to be women with the errors affecting pensioners who first claimed state pension before April 2016, do not have a full national insurance record, and should have received certain increases in their basic state pension.
An estimated £339m will go to pensioners who should have benefited from their spouse's or civil partner's national insurance record, £568m to widows and widowers who should have inherited more state pension entitlement from their deceased partner, and £146m to pensioners who should have had an increase in their pension at their 80th birthday.
Gareth Davies, comptroller & auditor general, NAO, said: ‘The impact of the underpayment of state pension on those pensioners affected is significant.
‘It is vital that the Department for Work and Pensions corrects past underpayments and implements changes to prevent similar problems in future.’
The DWP does not know how many pensioners who have died have been underpaid as, for data protection reasons, it does not usually keep records for more than four years after a pensioner's death, and if married, their spouse's death, according to the report.
Steve Webb, partner, Lane Clark & Peacock said: ‘DWP needs to do everything it can to track down the families of pensioners who have sadly died and never received the pension they were due.
‘We now need full transparency from DWP about the correction process, with regular updates and a full explanation of exactly which cases are being reviewed.
‘It should also explain how these errors were allowed to go on for so long and what lessons have been learned.’
As of August 2021, the DWP had not approved a formal plan to trace the estates of deceased pensioners.
In January 2021, the DWP started reviewing cases at risk of underpayment, an exercise originally expected to take over six years to complete and following a decision to recruit additional staff, the work is due to be completed by the end of 2023.
Between 11 January and 5 September 2021, the DWP reviewed 72,780 cases it had identified as being at risk of having been underpaid or who contacted it querying their payment, and paid a total of £60.6m of arrears to 11% of these cases.
The watchdog also stated that the figures may just be the tip of the iceberg as ‘the Department’s estimates are highly uncertain and the true value of the underpayments will only become clear once it has completed its review of all affected cases’.
A DWP spokesperson said: ‘We are fully committed to ensuring the historical errors that have been made by successive governments are corrected, and as this report acknowledges, we're dedicating significant resources to doing so.’
