Pensioners lose billions after a 'catalogue of blunders' by ministers

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Six mistakes had not previously been made public



The Government has spent more than £1bn rectifying eight state pension mistakes, after repeatedly underpaying pensioners and keeping taxpayers in the dark.

There has been a “catalogue of blunders” made by the Department for Work and Pensions, according to former pensions minister Sir Steve Webb. A Freedom of Information Request lodged by LCP, a consultancy, has uncovered eight separate errors which have left retirees out of pocket since 2007 – more than one every two years. Six of these mistakes were not publicly known until now.

The DWP has refused to say how much these errors have cost taxpayers in total, but experts said the sum was in the nine figures. The issues range from those affecting a handful of people to multi-million pound mistakes.

In one case alone, 134,000 women were underpaid more than £1bn after miscalculations were made on their state pension payments. Those affected are due an average £8,900 payout, while one in eight are due windfalls of more than £40,000 to make up for the wrongful underpayment. In one instance a woman was underpaid from 1985 to 2021.

Six mistakes had not previously been made public including underpayments for surviving spouses, those deferring the state pension and some transgender women. Incorrect payments were also made to retirees eligible to receive a second or additional state pension. In one case the Government took three years to identify a widespread problem with payments to some married women.

Sir Steve, who is now partner at LCP, said he was "astonished" the errors had not been made public and accused the department of taking a "hush hush" attitude to mistakes. He said: “The DWP needs to have greater transparency so that the public is told when things have gone wrong. Whilst anyone can make a mistake, what is worrying about this catalogue of errors is how long it can take for anyone to spot that anything is wrong.”

The former pensions minister warned some of the errors in the way the state pension was calculated would still be ongoing despite having been identified.

The Government was forced to conduct a large-scale correction exercise from 2009 to 2011 costing £83m after parents who were due “home responsibilities protection” for time at home with children were never recompensed on their state pension record. This was one of the two only cases to have previously been made public.

A scathing report from Westminster’s Public Accounts Committee, published in January, warned the system had been “unfit for purpose” for decades. It said plans to reimburse many of the women who were underpaid were a “shameful shambles”.

Millions of pensioner records had also been kept on an IT system that dated back to 1988 and was “intrinsically vulnerable” to errors, according to the MPs on the committee.

Many of those who were forced to get by on a reduced stipend for years would still be out of pocket, even after the Government reimbursed them, experts have warned. This is because lump sum payments of arrears could affect pensioners’ current or future entitlement to other benefits, including pension credit, social care or housing benefit.

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Sir Steve, who is now partner at LCP, said he was "astonished" the errors had not been made public ...

The man's a naive fool! Expecting honesty and fairness out of any government-run system is something of the way back past.

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Government blunders still costing pensioners up to £4,000 each



Women reaching state pension age this year are still being wrongly underpaid despite the Government spending £23m on staff to fix historic mistakes that left pensioners being owed more than £1bn.

Officials at the Department for Work and Pensions have been making fresh mistakes in state pension calculations and denying the blunders until challenged, a former pensions minister has warned.

In some cases retired women have been underpaid as much as £4,000 after being wrongly told they had zero entitlement to the state pension.

Former pensions minister Sir Steve Webb, now a partner at consultancy LCP, said despite a wide ranging correction exercise, fresh errors have continued to be made on the very same issue.

He said: “I remain concerned that even the chastening experience of discovering a £1bn underpayment in state pensions does not seem to have prompted a fundamental change in the department’s approach to checking state pension awards.”

It was previously revealed more than 500 staff have been recruited by the DWP to rectify the errors, at a cost of £24.3m to the taxpayer.

Until 1977, married women could opt to pay a reduced rate of National Insurance on their earnings and many of those who did could still be paying a “small stamp” today. This means that they would be entitled to a reduced state pension of £85 a week for married women and £141.85 if they divorced or were widowed upon retirement, despite them not having made enough NI contributions to qualify for a pension in their own right.

Sir Steve said: “When the DWP admitted to me that they had been making errors for this group of women I assumed that they would have put in place procedures to sort out the problem. Yet I continue to hear from women who have been wrongly told that they are not entitled to a pension.”

More than 134,000 women have been underpaid £1bn as part of a blunder that spans decades and was first uncovered in 2020. The DWP has pledged to track down and reimburse all those who have been left out of pocket and to do so by the end of 2023.

However, the department came under heavy scrutiny in April when it was found that officials had been ordered to cut short phone calls about the state pension from anyone who does not fit into a specific set of groups.

Pensioners worried that they have not received the correct amount have been turned away by call centres, said the Public Accounts and the Work and Pensions committees.

Earlier this year Dame Meg Hillier, Public Accounts committee chair, warned errors could be repeated during the correction exercise, despite it being the DWP's ninth attempt to fix the mistakes.

Those affected are typically women who first claimed state pension before April 2016 and who do not have a full National Insurance record.