Scale of state pension underpayments ‘staggering’

Women who were underpaid the state pension should be receiving a “gold standard” service to put the situation right, the chair of the Work and Pensions Committee has said.

But families are instead struggling to get through on the phone to the Department for Work and Pensions (DWP) or receiving incorrect advice, Stephen Timms said.

He was commenting on a letter the committee received from pensions minister Guy Opperman on the DWP’s approach to repaying historic underpayments of the state pension.

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 was identified in March 2020 and a repayment programme started in January 2021.

Mr Timms said: “The scale of this problem is staggering – it’s likely to affect tens of thousands of women and to cost some £3 billion to fix.

“The Government has a duty to be transparent with Parliament and the public about the progress it is making on an exercise of this magnitude. The minister says that there will be more information at the next fiscal event – but that isn’t likely to happen for another six months or more.

“Having created this problem, the DWP ought to be offering a gold standard service to pensioners and their families.

Watch: Why do we still have a gender pay gap?

“Instead, the department refuses to engage with reports of people having difficulty getting through on the phone line or receiving incorrect advice when they do. Too many cases have needed the intervention of journalists, professional advisers or high-profile figures to be resolved. It’s simply not good enough.

“We will continue to press for better and quicker answers from the department.”

The letter from Mr Opperman said: “We will contact people whose payments should have been increased and they will receive any arrears they are due in accordance with the law.”

The letter addressed several questions, one of which asked about reports that around 200,000 women will receive letters from the department to tell them that their state pension has been underpaid.

Mr Opperman said in response: “Estimates on the numbers affected and costs are currently based on highly complex scans of the computer system, analysis of DWP administrative data and very small samples of cases randomly selected and reviewed.”

He said estimates are highly uncertain and will be further refined as the correction activity progresses.

Asked about the correction work, Mr Opperman said: “The department already has a dedicated team of over 150 people working on the correction activity.

“Throughout 2021/22 we intend to significantly increase the capacity of the team with the recruitment of an additional 360 staff.”

Asked about who is being prioritised, he said the department has started by reviewing cases where the person is alive, focusing on older cases and people likely to be most vulnerable.

He said: “The approach therefore is to prioritise older individuals and those who have been widowed.”

He said the DWP does not not intend to create a separate telephone line for the repayment cases.

Asked how far back the department has been checking records, he said: “Our records currently show the earliest occurrence of an underpayment dates from 1992.”

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