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UK State Pension: Thousands more may be unpaid | State Pension

UK State Pension: Thousands more may be unpaid | State Pension

 


A new class of people appears to have emerged who are not receiving their state pension properly, with thousands of people potentially affected.

The man who made the claim was former pensions minister Steve Webb, who was instrumental in highlighting official mistakes that left thousands of people receiving too little state pension.

Since 2021, the Department for Work and Pensions (DWP) has been working to rectify existing state pension errors affecting a range of people.

But Webb, now a partner at consulting firm LCP, says his team has discovered a new type of widow and widower who are being paid as much as $2,000 a year less because of the DWP glitch.

The issue of non-payment of state pensions has been a subject of debate for many years.

In 2020, the DWP confirmed there were serious problems, and the following year the National Audit Office, the official spending watchdog, said most of those affected were likely to be women. The National Audit Office said complex state pension rules and outdated IT systems were to blame.

As part of DWP's remedial action, more than £280 million has been paid out to around 23,000 people who were wrongly denied a state pension they inherited from a deceased husband, wife or civil partner.

The DWP estimates that a total of 55,000 widows and widowers are affected and owed $650 million, but Webb's research suggests the figure could be much higher.

He was recently contacted separately by four people who had not received any of the state pension they inherited when they retired and were told they were not entitled to a pension from the DWP.

He said in all four cases it was the wrong decision and they were now receiving higher pensions on top of their unpaid taxes.

In some cases, the shortfall was more than $2,000 per year, meaning the person would lose more than $40,000 over a 20-year retirement.

Those most likely to be affected are those who are widowed or widower when they claim the new state pension, and whose deceased spouse reached pension age before 6 April 2016, or whose deceased spouse died before 6 April 2016.

Surviving pensioners are entitled to at least 50% of the additional state pension and 50% of the progressive retirement benefit, also known as the State Income-related Pension Scheme (Serps) or State Secondary Pension, created by their spouse. The latter was an income-related scheme designed to supplement the basic pension that operated from 1961 to 1975.

The amount you pay will vary depending on your individual circumstances.

These cases could be the tip of the iceberg, potentially leaving thousands of people underpaid, he said, and the department should launch an urgent investigation into the scale of the problem.

To help people understand which state pensions they may be entitled to in addition to their own, LCP has developed an online tool.

Anyone who believes they may be affected should contact Pensions Services if they discover an error.

A DWP spokesperson said: “We want to make sure pensioners get all the support they are entitled to and provide tools to help them understand the state pension they may inherit.

Sources

1/ https://Google.com/

2/ https://www.theguardian.com/money/article/2024/aug/10/uk-state-pension-thousands-underpaid-widows-widowers-dwp

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