More than 100,000 people in the UK may have been underpaid thousands of pounds in pension entitlements, a report has found.
The Department for Work and Pensions (DWP) said it could have underpaid an estimated 134,000 pensioners more than £1 billion, or an average of £8,900 each, according to an audit by the National Audit Office (NAO).
These numbers are based on estimates produced by the Department for its accounts but also include amounts paid before April 1, 2021. Women who have not been paid enough when their spouse or civil partner pass away as their National Insurance (NI) contributions were miscalculated are the most likely to have been affected.
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In early 2020, the number of women contacting the DWP to confirm the accuracy of their state pension increased following media coverage of women being underpaid significant amounts. The DWP later confirmed issues within its system which have led to the figures revealed in the latest report.
The NAO, an independent parliamentary body responsible for auditing government departments, said the issues arose due to a lack to back human errors, complex rules and outdated IT systems.
The final value of the underpayments and the number of pensioners affected will only become clear once the DWP has completed its review of all affected cases.
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The DWP is now reviewing state pension cases ‘at risk’ of underpayment to identify who it needs to pay arrears to. It will contact pensioners if it finds they have been underpaid. This process is known as a legal entitlements and administrative practices (LEAP) exercise.
At the time of producing the 2020-21 annual report and accounts, the DWP estimated that approximately 400,000 cases will need to be fully reviewed against the information the department already holds to ensure the pensioner is receiving the correct entitlement.
544 staff have been recruited for the LEAP exercise and now expects it to take until the end of 2023, at a staff cost of £24.3 million.
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