Around 134,000 pensioners have been underpaid in a string of errors dating back decades. Image: Pexels
Tens of thousands of pensioners missed out on a share of around £1bn from the government in what MPs have called a “shameful shambles”.
The Department for Work and Pensions’ (DWP) use of “outdated” systems and widespread errors mean 134,000 older people – mostly women – have been deprived of their full entitlement, dating back as far as 1985 in some cases.
Government staff are now working to correct mistakes by the end of 2023 – paying back an average £8,900 to each pensioner – to a cost of more than £24m to taxpayers.
In a damning report, Westminster’s public accounts committee said it found evidence of state pension underpayments reaching up to £128,000.
Around two million people of pension age are in poverty in the UK, with around 20 per cent of older women living below the breadline and fears that the cost of living squeeze will force more older people to go without essentials from April.
“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,” said Meg Hillier, committee chair.
“Departments that make errors through maladministration have a duty to put those it wronged back in the position they should have been. In reality DWP can never make up what people have really lost, over decades, and in many cases it’s not even trying.
“An unknown number of pensioners died without ever getting their due and there is no current plan to pay back their estates.
“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 of delays in new pension claims. 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. The [public accounts committee] expects DWP to set out the step changes it will make to ensure it is among the last.”
Government officials have also “showed little interest in understanding” the consequences of paying back underpaid state pensions in lump sums, according to the report, including on how it could impact people’s benefits entitlement and social care funding.
Around 94,000 of the people whose state pensions were underpaid are thought to still be alive. The DWP is still required to pay back to their estates, but has not set out a mechanism to do so.
Meanwhile staff being reassigned to deal with the problem is resulting in backlogs processing new pension claims, the MPs said.
The government came under fire in November for scrapping the pensions triple lock, breaking a 2019 manifesto promise and threatening to plunge another 700,000 pensioners into poverty.
Ministers changed the rules to mean the state pension increase – set for April – did not have to adhere to the level of inflation, despite it already hitting a 30-year high and driving up energy and food prices.
A DWP spokesperson 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.”