More than 230,000 retirees have been underpaid the state pension by £9,000 on average, experts say.
Around 237,000 people are affected, and as many as 700,000 people are due reviews to check if they are too, according to financial firm Standard Life.
Affected pensioners can include widows and widowers, divorcees and more. Retirees can be underpaid the state pension for a number of reasons.
Standard Life managing director, customer savings & investments Jenny Holt said: “Last year, the National Audit Office estimated that as many as 134,000 pensioners, mostly women, may not have received the full amount of state pension they’re entitled to, being owed an average of £8,900.
"This amounts to total underpayments of over £1 billion.
"Estimates this year are even higher, with around 700,000 potential cases needing to be reviewed by the government and potentially as many as 237,000 people affected – meaning almost 2% of everyone receiving a state pension could be eligible for a top-up payment."
The people most likely to have been affected by these underpayments are those who reached state pension age before April 2016.
That is particularly the case if they didn’t have a full National Insurance record or full state pension entitlement.
Here are the groups of people most likely to have been underpaid the state pension:
- 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 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 pension but may have been underpaid (if they were getting less than 60% of the full basic 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 to check if you have been underpaid the state pension
Ms Holt said: "If someone feels that they have not received the full amount that they are entitled to from their state pension, they should contact the Pension Service."
Make sure you have your National Insurance number to hand when making your claim, along with details of what you currently get in state pension.
If applicable, also have your spouse or civil partner’s name, date of birth and death, their National Insurance number and how much your spouse receives or did receive in state pension.
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, and explains who may be affected.
The website has a link to request information.
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.
Some back payments may affect your tax situation or benefits entitlement.