DWP 'may have underpaid thousands more people’

Many widows and widowers could be missing out on thousands of pounds, it’s been claimed.

The Department of Work and Pensions (DWP) has been accused of making fresh errors in thousands of new pension payments.

Former Pensions Minister Steve Webb claims the DWP has underpaid thousands of widows’ and widowers’ State Pensions.

The DWP previously admitted in 2020 that it had underpaid a number of State Pension claimants and in 2021 the National Audit Office revealed that most of these were women.

At the time, the Government spending watchdog blamed IT problems and complex State Pension rules.

As such, nearly 23,000 people who failed to receive inherited State Pensions from their late spouse or civil partner have received restoration from the DWP totalling more than £280 million.

However, Webb, now at consultancy LCP, says he and his team have found evidence that the Government Department is making new payment errors relating to more recent State Pension claims.

Retired widows and widowers could be missing out on £1,000s

The DWP estimates that around 55,000 widows and widowers could be owed £650 million.

However, Webb claims that the true figure may be higher than this.

The former pensions minister says people claiming the new State Pension who were already widowed when they retired may be affected.

He says he was recently contacted by four separate individuals who did not receive any inherited State Pension on their retirement and were informed by the DWP that they were not entitled to it.

In all four cases, Webb says, this was found to be incorrect and the Department increased the claimants’ State Pension payments and paid arrears.

In some cases, the shortfall was more than £2,000 a year – meaning that the claimant could have missed out on more than £40,000 over a 20-year retirement period.

Who is affected?

Those most affected, according to LCP, are those who were widows or widowers when they began claiming their new State Pension and their late spouse reached pension age before 6 April 2016 or died before that date.

In this case, the widow or widower could inherit at least 50% of any additional State Pension which the late spouse built up, plus 50% of any Graduated Retirement Benefit.

How much could I be owed?

The exact amount will depend on individual circumstances but will be higher if the late spouse was an employee rather than self-employed and the widow or widower is not receiving a widow’s pension from a company scheme.

The amount of inherited State Pension a claimant may be due will also be affected by whether the late spouse came under the old or new State Pension and when they died, as well as whether they belonged to a contracted out occupational pension scheme.

“These cases may well be the tip of an iceberg, with many thousands of people potentially underpaid,” said Steve Webb, partner at LCP. 

“The Department needs to launch an urgent investigation into the scale of this problem.” 

Where to get help if you’re affected

Contact the Department of Work and Pensions if you think you may be owed pension payments:  Contact the Pension Service: Get information about your State Pension - GOV.UK (www.gov.uk)

In addition, the DWP also has an online tool here: Your partner’s National Insurance record and your State Pension - GOV.UK (www.gov.uk)

LCP has also launched a tool to help anyone who thinks they may be owed money by the DWP: Inherited State Pensions for widows and widowers (lcp.com)