Women's state pension shortfalls a shameful shambles, MPs say

A £1bn shortfall in state pension payments to tens of thousands of women has been branded "a shameful shambles" by a committee of MPs.

A total of 134,000 pensioners missed out on their full entitlement owing to errors at the Department for Work and Pensions (DWP) dating back to 1985.

Some of those failures risked being repeated during a correction programme, the Public Accounts Committee said.

The DWP said it was resolving cases as quickly as possible.

Why did women miss out?

The problem relates to the "old" state pension system where married women who had a small pension in their own right could claim a 60% basic state pension based on their husband's record of contributions.

Widows and divorcees have also been affected. Some will receive all their entitlement, although years later than they should have done. Others will only be able to claim for 12 months of missed payments.

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Among them is Jan Tiernan, from Fife, who was initially told she was not owed any money. After nearly 100 pages of correspondence with the department, she received £1,280, but believes she is owed more.

"You need a lot of energy, and when you are 80-years-old you don't have that kind of energy. It tires you," she told the BBC.

Jan Tiernan was originally told her payments were correct

"I feel let down by the system."

She said that the extra money would have made a lot of difference to pensioners, from helping to pay heating bills to going towards a holiday.

The committee's report said the errors were the result of outdated systems and heavily manual processing of pensions at the DWP. 

Small errors that were not recognised added up to significant sums of money over the years.

In a damning report, it concluded:

• The failures have led to significant losses to taxpayers. Staff costs in correcting mistakes by the end of 2023 are expected to reach more than £24m

• There is no plan for contacting families of pensioners who have already died, and who should receive some of their entitlement

• The DWP has been "inconsistent" in paying pensioners interest on the money that was owed

• It has ignored knock-on consequences of paying lump sums, including on benefits and social care provision, to those it underpaid

• Other pensioners could be missing out and should receive clearer information about how to claim

The committee said that there was a risk that the errors that led to underpayments in the first place could be repeated in the correction programme, the ninth such exercise since 2018.

There was also concern that, by allocating staff to deal with this problem, backlogs occurred in dealing with claims from new pensioners who suffered delays in receiving their state pension at 66.

Meg Hillier, who chairs the committee, said: "For decades DWP has relied on a state pension payment system that is clunky and required staff to check many databases - and now some pensioners and the taxpayer are paying in spades.  

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

"This is a shameful shambles."

Call for urgency

Among a string of recommendations made in the report is that the DWP should find cost-effective ways to update its computer systems.

The committee also said the DWP needed to make clear how it was treating underpayments related to divorced women.

Former pensions minister Sir Steve Webb, who is now a partner at consultancy LCP, first raised concerns about underpayments, and has called for divorcees to be included having their entitlement checked.

"The DWP's defensive reaction to questions and scrutiny over this issue suggest that lessons have still not been learned," he said. 

"There are still far too many people missing out on the state pension to which they are entitled and DWP needs to track them all down as a matter of urgency."

A DWP spokesman said: "Resolving the historical state pension underpayments that have been made by successive governments is a priority for the department and we are committed to doing so as quickly as possible.

"We have set up a dedicated team and devoted significant resources to processing outstanding cases, and have introduced new quality control processes and improved training to help ensure this does not happen again. Those affected will be contacted by us to ensure they receive all that they are owed."

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