State pension underpayment a shameful shambles, MPs say

The errors mostly affect widows, divorcees and women who rely on their husband's pension contributions for some of their pension

The Department for Work and Pensions (DWP) estimates it has underpaid 134,000 pensioners, mostly women, over £1bn of their state pension entitlement, with some errors dating as far back as 1985.

In January 2021, DWP started an exercise to correct the errors - the ninth such exercise since 2018, the Public Accounts Committee (PAC) said.

Dame Meg Hillier, chairwoman of the PAC, said: Departments that make errors through maladministration have a duty to put those it wronged back in the position they should have been, without the error.

In reality DWP can never make up what people have actually lost, over decades, and in many cases it's not even trying, she said.

An unknown number of pensioners died without ever getting their due and there is no current plan to pay back their estates, she said.

DWP is now on its ninth go at fixing these mistakes since 2018, the specialised staff diverted to fix this mess costing tens of millions more to the taxpayer and predictable consequences in delays to new pension claims, Hillier said.

And there is no assurance that the errors that led to these underpayments in the first place will not be repeated in the correction exercise. This is a shameful shambles, she said.

The errors mostly affect widows, divorcees and women who rely on their husband's pension contributions for some of their pension.

Complex pension rules and a reliance on highly manual systems led to the underpayments.

The committee of MPs said the underlying IT system relied on to manage millions of pensioner records dates back to 1988.

Quality checks failed to identify the systematic underpayments and small errors added up over years to significant sums of money.

The PAC said the department should consider whether there are cost-effective ways to upgrade its IT systems ‘as a matter of urgency’.