DWP could pay £100m for pensions blunder

The Department for Work and Pensions (DWP) may have to pay £100 million in underpaid pensions to married women.

It is understood they have set up a special claims unit for those women who fear they have missed out on the payments.

Underpaid

The blunder was uncovered after former pensions minister Sir Steve Webb found that tens of thousands of wives, widows and divorcees may have been underpaid for years.

The error involves women who reached state pension age before April 2016 and are entitled to receive a pension based on their husband’s National Insurance record.

Investigation

After receiving a question in his newspaper column Sir Steve found many women were unaware that they were entitled to the increased payment so he initiated an investigation.

Now Peter Schofield, the DWP’s top civil servant, has told the Work & Pensions Select Committee that 11,000 women have already been in touch and 7,200 claims have been processed so far.

Approximately 1,900 have been found to have been underpaid and will each receive an average lump sum payment of £10,000.

Petition

A petition started by Sir Steve, demanding that the DWP has trawl all its records rather than wait for claims to be made, has obtained more than 10,000 signatures which means the department must respond.

Sir Steve estimates the DWP will have to pay out between £25 million and £30 million on the claims received so far and as much as £100 million once the trawl has been completed.

Two widows have already received payouts of £115,000 and £117,000.

Many more

Sir Steve believes many more underpayments will be discovered. He said: “The vast scale of this under-payment is only now starting to come to light.

“Back in May we estimated that tens of thousands of women were not getting the right amount of state pension, and millions of pounds have already been paid over.

But it has become increasingly clear that the DWP’s trawl of its own records is uncovering a can of worms and the final bill seems set to be over £100million.

“Many of these women have been underpaid for a decade or more, and the situation needs to be put right as a matter of urgency.”

Team

In his evidence to the Select Committee Mr Schofield said the current team of 37 civil servants working on the investigation would be expanded and that, though initial trawls often revealed very large number of potential claimants, each would have to be examined manually.

But he did admit that many more women are likely to be identified as being underpaid.

Active claim

Sir Steve commented that it was unclear how long the department’s investigation would take and warned that married women whose husband turned 65 before March 17th 2008 will only get an increase if they make an active claim.

Baroness Ros Altmann, another former pensions minister, has also demanded the DWP get to grips with the situation and to explain what went so badly wrong with its system.

Really important

She said: “This is a really important issue. Women have much lower pensions than men and make up the majority of pensioners in poverty.

“Many of them are living on far less than they are entitled to, because the DWP has failed to pay them the right amount and I am pleased to see the DWP is now looking into the matter properly.

Urgently

“These women need to be repaid urgently and the public needs to know why the mistakes have occurred.

We deserve an explanation for the failure to correctly inform the women and to understand what has gone wrong, so that such mistakes are less likely to happen in future.

“Of course, with a system that pays money to millions of people every week there are bound to be some mistakes, but this seems to have been a significant problem that affects only older women, who are some of the most vulnerable people in our society.

They deserve special attention urgently.”