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Women who were ‘short-changed’ on state pension to receive payments

Vicky Shaw, PA Personal Finance Correspondent
·2-min read

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 identified in March 2020 suggested some people had been underpaid, according to Office for Budget Responsibility (OBR) documents.

Underpayments affected married women whose husbands reached pensionable age before 2008 and who were unknowingly entitled to an “enhanced pension” that would have boosted their payments by up to 60%.

Department for Work and Pensions (DWP) investigations between May and December 2020 uncovered a systematic underpayment of state pensions, meaning tens of thousands of married, divorced and widowed people may have been underpaid since 2008.

A repayment programme started in January 2021.

The report said: “Our forecast reflects an initial estimate that it will cost around £3 billion over the six years to 2025-26 to address these underpayments.”

It warned that the costing “is subject to a high degree of uncertainty as the true extent of the underpayment is not yet established”.

Sir Steve Webb, a former pensions minister who is now a partner at pensions consultants LCP (Lane Clark & Peacock), which has previously heard about some refunds amounting to more than £30,000, said: “This figure is truly mind-numbing. When I first looked into this issue a year ago I had no idea it would explode into such a huge issue.

“Repayments of £3 billion over the next five years could imply huge numbers of women have been short-changed, potentially for a decade or more.

“The Government needs to devote serious resources to getting these repayments out quickly as these women have waited long enough.”

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As the correction exercise requires an assessment of hundreds of thousands of cases, it could take many months to complete.

In some cases, people will have died, and payments will be made to the appropriate person in these instances, such as next of kin.

Those whose husband reached state pension age prior to legislation changes in 2008 will still need to make a claim, but those whose husband reached state pension age after March 2008 should not need to take any action.

A DWP spokesman said: “The action we are taking now will correct the historical underpayments that have been made by successive governments.”