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£209m handed back to retirees owed state pension payments

More than £200 million worth of state pensions have been repaid as part of a Government checking and correction exercise.

The checking process, which started in January 2021, has identified 31,817 underpayments, with a total of £209.3 million owed, according to the Department for Work and Pensions (DWP).

One pensions expert said the total repaid so far is a “drop in the ocean” when compared to the amount estimated to have been underpaid overall.

Those who have been underpaid include some pensioners who were married and should have received an upgraded pension, people who were widowed and the over-80s.

Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown said: “Today’s data shows the DWP has so far handed back more than £209 million to people affected by state pension underpayments.

“This is progress but a drop in the ocean when compared to the almost £1.5 billion estimated to have been underpaid overall.

“In some cases, these underpayments have stretched back decades and even though DWP has pledged to hire more people to speed up the process, it is clear many could be waiting for some time still before they are reunited with their money.

“Women retiring under the old basic state pension system are primarily affected. They will have had an expectation their state pension would be paid correctly and due to an overly complex system this has not happened on a huge scale with many women enduring financial distress as a result.”

Tom Selby, head of retirement policy at AJ Bell, said: “It is absolutely critical all those affected by this scandal receive the money they are owed as quickly and efficiently as possible.

“For retirees on low incomes preparing for a cold winter, a cash windfall worth thousands of pounds could prove a lifeline after years surviving on an artificially low income due to the DWP’s errors.”

Sir Steve Webb, a former pensions minister who is now a partner at consultants LCP highlighted DWP figures suggesting that a total of 237,000 pensioners are affected by payment errors, with around £1.46 billion owed – leaving more than £1 billion still outstanding.

Sir Steve said: “With cost-of-living pressures affecting many elderly people on low incomes, it is essential that the pace of fixing these errors is stepped up and people get the money they are due as soon as possible.”

The Government recently confirmed that the triple lock will be used to uprate the state pension next year.

The triple lock guarantees that state pensions increase by September’s inflation figure, wages or 2.5%, whichever is higher.

The guarantee means that retirees are heading for a 10.1% increase to the state pension from next April.

A DWP spokesperson said: “The action we are taking now will correct historical underpayments made by successive governments. We are fully committed to addressing these errors, not identified under previous governments, as quickly as possible.

“We have set up a dedicated team and devoted significant resources towards completing this, with further resources being allocated throughout 2023 to ensure pensioners receive the support to which they’re entitled.”