Thousands of women pensioners could be due a windfall

Former pensions minister Steve Webb said some women may be entitled to huge refunds but could be missed by data searches currently being carried out by the DWP

Thousands of women could be entitled to "lottery winning" amounts of money due to a pension loophole.

It is thought that as many as 5,000 women who have been living on £1-a-week state pensions could be due a windfall after being underpaid for decades.

Former pensions minister, Steve Webb, who is now a partner at consultants LCP, said some women may be entitled to huge refunds but could be missed by data searches currently being carried out by the Department for Work and Pensions (DWP).

If all of these women came forward and claimed the money, Sir Steve estimated the total bill could easily be a quarter of a billion pounds.

He said women he has helped recently include one woman who was entitled to £56,000 in back pension, another to £33,000 and a third to more than £60,000.

Some women were until recently on pensions of only around £1 per week, he said.

Under a little known rule, Sir Steve said women in this specific group were allowed to claim back pension to before a 2008 rule change, which has prevented many other married women from making backdated claims.

Three main elements made up the old state pension system: a basic state pension, an earnings-related pension (also called Serps) and an older graduated retirement benefit (GRB), which ran from 1961 to 1975 and was a forerunner of Serps.

The women who qualify for this special concession are those with no basic pension but who are receiving a tiny amount of GRB.

They can make a backdated claim today all the way back to when their husband turned 65, Sir Steve said.

In March, documents revealed in the Budget showed thousands of women who were underpaid the state pension were in line for top-ups, with the bill put at around £3 billion.

But Sir Steve said the group of 5,000 women were likely to be missed by the DWP's data search - and they should contact the department as soon as possible to see if they were owed money.

He said: It is incredible that there are thousands of women getting such tiny pensions, but even more incredible that many could potentially be entitled to tens of thousands in back payments.

He said that it is as if they are sitting on unclaimed winning lottery tickets. It is very important that women on these very small pensions make contact with the DWP as soon as possible to see if they could be entitled to a windfall.