Underpaid State Pension of £2.7bn? Could be the case for some female retirees
About 200,000 women could be in line for pay-outs averaging £13,500 to top-up the underpayment of their state pension for up to two decades, according to the Department for Work and Pensions (DWP).
You might have seen in the news over the start of 2021 that tens of thousands of women are likely to have been underpaid the State Pension for quite some time. Many could be due repayments amounting to thousands, possibly tens of thousands of pounds.
The errors focus on automatic cash increases for certain married women, widows and over-80s dating back to 1992 with "enhanced" pensions. This relates to the ‘old’ state pension system, so it affects those who reached state pension age before 06 April 2016. The old system had special provisions for married women.
In an updated report on the BBC in mid-April 2021, a lady in Surrey has challenged her position with regards to her State Pension and discovered that she was due £61,000 and a full State Pension of £82.45 pw (rather than the £1 pw she was receiving). The DWP estimates the bill for tackling the shortfalls to be about £2.7bn.
Under these old rules, married women who had a poor pension in their own right could claim a 60% basic state pension based on their husband's record of contributions. However, some of these pensions were not automatically increased when they should have been.
You should receive a top-up automatically if you are:
A woman whose husband reached the age of 65 on or after 17 March 2008 and who is being paid less than 60% of your husband’s basic state pension
A widow whose husband died after April 2008 and who was being paid less than 60% of his state pension during his lifetime
A widow whose state pension didn’t increase when their husband passed away
A woman who’s aged 80 or over and is not being paid at least £80.45 per week in state pension
If you fall into one or more of these categories, you will be contacted by the Department for Work and Pensions (the DWP) over the coming months if you are due a pension uplift. Importantly, please do take care against fraudsters taking advantage of these expected contacts from the DWP.
"The action we are taking now will correct the historical underpayments that have been made by successive governments, and anyone impacted will be contacted by us to ensure they receive all that they are owed," a spokesman for the DWP told the BBC.
A review will now take place to assess hundreds of thousands of cases, which could take many months to complete. It will include cases where the underpaid retiree has since passed away.