MARTIN Lewis’ MSE issued an urgent warning after 55,000 state pensions were found to be underpaid.
A whopping total of £650million could be owed to widows and widowers following a fresh wave of state pension errors.
MSE explained that the people affected were likely widows and widowers when they claimed their new state pension.
Their late spouses also would’ve reached the pension age or died before April 6, 2016.
To date two major historic underpayments, largely affecting women, have been uncovered.
The Department for Work and Pensions (DWP) has been undertaking a correction exercise since 2021 to fix these errors.
Sir Steve Webb, former pensions minister and current partner at LCP, says he has found evidence of a new group of cases where incorrect information led to women being shortchanged.
He claimed to have been contacted by four separate people who had not been awarded any inherited state pension when they retired.
They had been told in writing or over the phone by the DWP that they weren’t entitled to any payments.
In all four cases, this was incorrect and an increased amount of state pension has been arranged and arrears have been paid, Sir Steve said.
In two of the cases, the underpayment amounted to over £2,000 a year, which could potentially add up to a whopping £40,000 shortfall over a typical retirement.
For these four pensioners, an increased amount of state pension has now been put into payment and arrears have been paid.
Steve said one of the people he dealt with had said: “I personally would like to see more people come forward to claim what is rightfully theirs.”
LCP is now aiming to alert people to the errors so that they can check and contact the Pensions Service.
The former pensions minister said: “Having had to spend years checking hundreds of thousands of historic state pension calculations for errors, you would hope that DWP would be making sure that new claims are handled correctly.
“But we have found worrying evidence that this is not the case. There seems to be a particular problem for people who are widows or widowers when they claim their state pension.”
ERRORS TOOL
LCP has developed an online tool to help people understand what state pension they are entitled to inherit on top of their own state pension here.
A tool previously launched by the company to help married women check for underpayments had over one million visits.
Steve said: “The department needs to launch an urgent investigation into the scale of this problem.”
The DWP also has a tool to help those receiving the new state pension assess their eligibility for inherited state pension amounts here.
There is also a guide on inheriting or increasing a state pension here.
A DWP spokesperson said: “We want to ensure pensioners receive all the support to which they are entitled and have a tool to help them understand what state pension they can inherit.
“Delays can occur to a customer’s state pension award when not all the information we need is provided.
“In these cases, we will make a state pension award based on the customer’s own national insurance record until we have the required information.
“Once we have the necessary documentation, we will then revise the customer’s claim as soon as possible.”
What are state pension errors?
STEVE Webb, partner at LCP and former Pensions Minister, explains what state pension errors are and how they can occur:
The way state pensions are worked out is so complicated that many thousands of people have been paid the wrong amount for years without even realising it.
The amount of retirement pension you get usually depends on your National Insurance (NI) record.
One big source of errors has been cases where NI records have been incorrect, particularly for years spent at home with children.
This is a system known as ‘Home Responsibilities Protection’.
Alternatively, particularly for older pensioners, the amount you get can depend on the NI contributions made by your spouse.
Errors have arisen where the Government has failed to adjust the pensions of married women when their husbands retired or failed to increase pensions when someone was bereaved and lost a husband or wife.
Although the Government has spent years trying to fix these problems, there are still many thousands of people – many of them older women – on the wrong pension.
If you have always thought that your pension seems low, then it is worth contacting the Pensions Service to ask them to check, especially if you spent time at home raising children or if you were widowed and your pension didn’t change when your spouse died.