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Just £200m handed out in billion pound state pension scandal

department for work and pensions state pension underpayment scandal
department for work and pensions state pension underpayment scandal

Pensioners who were left out of pocket after a string of blunders at the Department for Work and Pensions have been paid back just £209m of an estimated £1.46bn owed.

About 237,000 retirees are believed to have been affected by the state pension underpayment scandal, but so far only one in seven have received a payment from the DWP, its latest report showed.

The amount the DWP has paid back since it began a formal review into the scandal last January is a “drop in the ocean” compared to the total underpaid over the decades, experts warned.

Helen Morrissey, of stockbroker Hargreaves Lansdown, said: “The DWP has let pensioners down on a massive scale – particularly women who tend to retire on lower incomes anyway.”

The majority of those wrongly underpaid the state pension due to government errors are women retiring under the old basic state pension system who were entitled to higher rates due to their husband’s National Insurance record. Others did not get the uplifts they were owed after their husbands died.

The National Audit Office has estimated that around 40,000 people who were due a repayment have died without receiving it.

Steve Webb, a former pensions minister now of consultancy LCP, said that the DWP was “way behind schedule” in fixing the errors.

In its recent annual report the DWP said it would complete repayments by late 2024.

But between February and October this year the DWP made 2,000 payments per month, and Mr Webb said it would take at least "five more years before they find all the errors", even if the rate rose to 3,000 a month.

More than a hundred thousand pensioners – mostly women – continue to be paid the wrong rate in the meantime.

Mr Webb: “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.”

A spokesman for DWP 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.”