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Women could be due £250m state pension windfall

Jessica Beard
·3-min read
Money in a pot with a rainbow (illustration)
Money in a pot with a rainbow (illustration)

A group of 5,000 women stand to receive a quarter of a billion pound windfall to make up for years of being underpaid the state pension they were due, according to a former pensions minister.

Overall, 200,000 women have been found to have been short-changed due to the government errors on their state pension for years and are due refunds totalling £2.9bn.

The Department for Work and Pensions has already promised to reimburse all those who have been left out of pocket, with 74,000 married women due to receive up to an average of £23,000.

But a new subset of women have been identified who may be entitled to huge refunds and are likely to be missed by the DWP’s data search, according to Sir Steve Webb, partner at LCP, a consultancy, and pensions minister from 2010 to 2015.

Sir Steve said he had already helped three women who were entitled to lump sum payments of £60,000, £56,000 and £33,000. The women in question has been receiving tiny pensions, as little as £1 a month in some cases.

He said: “It is incredible that there are thousands of women getting such tiny pensions, but even more incredible that many could potentially be entitled to tens of thousands in back payments.”

Ask Kate a question | The Telegraph’s pensions doctor
Ask Kate a question | The Telegraph’s pensions doctor

An official from the Pension Service told Sir Steve that these women will not be notified as they are treated as having not yet claimed their pension.

A spokesman at the DWP said some of the 5,000 would be identified and contacted as part of the wider reimbursement programme. However, it is understood that a significant number of these may go undetected.

The spokesman said: "The action we are taking now will correct the historical underpayments that have been made by successive governments and anyone impacted will be contacted by us to ensure they receive all that they are owed."

Women in this specific group who do log a claim can get payments backdated to before a 2008 rule change, which has blocked many other married women from making backdated claims. An estimated 5,159 women are expected to fall into this category and have been receiving an average £1 a week. However, they are able to make a backdated claim today all the way back to when their husband turned 65. Those who qualify have zero basic pension entitlement but receive a small amount of “graduated retirement benefit”.

There were three main elements to the old state pension system, in place prior to April 2016, including a basic state pension, an earnings-related pension, also known as Serps, and a much older graduated retirement benefit, which ran from 1961 to 1975.

There are currently 23,766 women who received this graduated retirement benefit only, who receive an average of £0.86, according to official figures obtained by Sir Steve from the DWP’s database.

Over 5,000 of these live in Britain and many could be eligible to receive more than £45,604 if their husbands turned 65 before 2008. Thousands more of the group of women live abroad, but are not thought to be able to claim anywhere near as much.

The DWP has been approached for comment.

Are you owed money on your state pension? We want to hear from you, email jessica.beard@telegraph.co.uk