A record number of people were received less state pension than they should last year according to the latest figures from the Department of Work and Pensions.
Its figures show that state pension underpayments were £670m for the 2022/23 year — significantly higher than the £540m that was underpaid the previous year.
The data also shows that six in every 100 new state pension claims received underpayments int he previous year.
The DWP said these problems were due to historical errors — often relating to married women on a low pension who did not get an automatic increase when their husband retirement (or did not get their pension reassessed when their husband died). It said there were also errors recording ‘credits’ for time at home with children.
The DWP also reported that some state pensions were overpaid – but a far smaller proprotion. Last year total overpayment were £100m, meaning underpayments were six times larger than the overpayments made by the government.
The figures were published as part of the DWP annual statistic on benefit fraud and error.
LCP consultant and a former pensions minister Steve Webb described the scale of these errors as ‘shocking’. He adds: “Whilst it is right that there is a focus on fraud in the benefit system, DWP should be equally concerned where it is not paying people what they are entitled to.
“What is particularly alarming is that these errors are not just historic problems, with 6 in 100 new pension claims being underpaid. Urgent action is needed to drive up standards of administration so that pensioners can have confidence that the pension they are being paid is correct.”
Hargreaves Lansdown head of retirement analysis, Helen Morrissey says this “eye-wateringly high” figure was perhaps no surprise given the huge exercise the DWP is undergoing to correct historical errors that meant many people, did not receive uplifts to which they were entitled.
She adds: “Many of these underpayments go back years and amount to thousands of pounds. Government is making headway in making these repayments, but the scale of the problem is vast, and it will take time to complete, but in the meantime many of these people have been under financial strain that they didn’t need to be.
This issue was primarily caused by the complexity of the basic state pension system. The current system is much more straightforward, but it is important to get a state pension forecast to check that what is on record is correct.”
