The most recent report by the public spending watchdog on the Department for Work and Pensions (DWP) accounts has revealed that around 237,000 people over State Pension age have been underpaid a total of £1.46 billion. The underpayments average around £8,900 per person.
Earlier this month, Jenny Holt, Managing Director, customer savings and investments at Standard Life explained that the people most likely to have been affected by these underpayments are those who reached State Pension age before April 2016, particularly if they didn’t have a full National Insurance record or full State Pension entitlement.
And this week, Pensions Minister, Laura Trott, has announced that by the end of March next year, the DWP plans to have around “1300 staff dedicated” to the State Pension underpayments LEAP exercise.
Her response came after Shadow Work and Pensions Secretary, Jonathan Ashworth MP, asked DWP “what steps it is taking to increase the speed of rectifying the underpayment of the State Pension to 237,000 people”.
In a written response on November 15, Ms Trott said: “The Government is fully committed to ensuring that these historical errors, made by successive Governments, are addressed as quickly as possible. By the end of March 2023, we plan to have around 1300 staff dedicated to the State Pension LEAP exercise.”
The DWP started the Legal Entitlements and Administrative Practice (LEAP) exercise in January 2021 to address State Pension cases where people were being underpaid.
Who may be due back payments for State Pension?
There are certain groups of people among those who reached the State Pension age before April 2016 who are more likely to be affected by underpayment than others.
The Public Accounts Committee (PAC) highlights who may be affected:
- Married people or those with a civil partner, whose spouse or partner turned 65 before March 17, 2008 and whose State Pension is less than 60% of their partner’s basic State Pension. They could now be owed a boost, including some backdated payments, for which they will need to make a claim.
- People who got divorced or dissolved a civil partnership after they had retired and whose State Pension does not take into account their former partner’s National Insurance contributions. Potentially, these people could be owed a top-up on their pension, for which they would need to make a claim.
- People who are married or in a civil partnership and turned 65 before March 17, 2008 and are not receiving anything in basic State Pension but do receive a small amount from additional State Pension. Some people who fall into this group have been receiving as little as £1 a week and are eligible to claim 60% of the basic State Pension, backdated to when their spouse reached 65. They could potentially claim large amounts, and so people who think that they or their loved one are in this category should strongly consider making a claim.
- People who are 80 years old or over and are not currently receiving at least £85 a week from their State Pension. Pensioners in this group don’t need a full National Insurance contributions record, but they do have to satisfy a basic residency test. You should have been notified automatically by the DWP if you are in this group, but you may also want to check yourself.
- Widowed people whose State Pension did not rise when their spouse passed away. People in this situation may be entitled to an increase to the full State Pension, plus some of their additional State Pension, depending on their late spouse’s National Insurance Record. The DWP should automatically identify individuals in this group, but it is definitely worth double checking if you think it may apply to you.
- People who currently receive the correct level of State Pension but may have been underpaid (if they were getting less than 60% of the full basic State Pension) while their spouse was alive. Some widows whose spouses reached pension age after March 17, 2008 are in this position.
- The families of people whose State Pension was underpaid during their lifetime. Although some people in this category will be notified automatically, many may not be, because records for them no longer exist, and they have fallen through cracks in the system.
How much unpaid State Pension could I be owed?
The average amount owed in unpaid pensions was initially estimated at just under £9,000, however individual amounts paid out have varied widely.
This is partly due to different types of claims having different backdating rules and also because some people may be able to claim in more than one category.
How to Make a Claim
A phone call to the pension service is the quickest way to find out if you are eligible for a State Pension refund.
The best number to call is 0800 731 0469 but full contact details can be found on the Gov.uk website here.
What if the person who was underpaid has died?
If the person who was underpaid their State Pension has passed away, the best thing to do is go to the DWP’s recently launched website that is dedicated to this issue, which explains who may be affected - find out more here.
To keep up to date with the latest State Pension news, join our Money Saving Scotland Facebook page here, or subscribe to our newsletter which goes out four times each week - sign up here.
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