DWP underpays 134,000 pensioners, report finds

At least 134,000 pensioners in the UK have been underpaid their state pension entitlement due to complex rules and repeated human error, the National Audit Office (NAO) has concluded.

The Department for Work and Pensions (DWP) will have to pay an estimated £1,053m in arrears, with the estimated average underpayment standing at £8,900.

The NAO said these numbers remain “highly uncertain” and could rise further once the DWP has completed its review of all affected cases.

The error impacts pensioners who first claimed the state pension before April 2016 and who did not have a full National Insurance record or who should have inherited additional entitlement from their deceased partner.

While the demographics of pensioners most impacted is not yet clear, the NAO said 90 per cent of people who claim the types of state pension affected are women.

The levels of underpayment discovered so far range from just a penny to £128,448, with the earliest dating back to 1985.

Approximately 118,000 pensioners are in line to receive extra payments. The DWP does not expect to be able to trace the remainder.

The NAO investigation concluded: “The underpayments were due to repeated human error over many years, some level of which was almost inevitable given the system’s high degree of manual review and complex rules.”

It also said there have been “missed opportunities” to detect, correct or prevent errors in quality assurance arrangements, and criticised the DWP for failing to “assess whether individual detected under-or-over payments have a systemic cause that might indicate a wider error”.

The report also warned mistakes were “likely” to have been made in response to pensioner queries about correcting payments between January and June 2021, after the issue first surfaced.

The DWP is now reviewing all state pension claimants “at risk” of underpayment, a process which is expected to take until November as it covers 400,000 cases.

Between 11 January and 5 September, the DWP had reviewed 62,780 cases and paid out £60.6m in arrears.

A DWP spokesperson said: “We are fully committed to ensuring the historical errors that have been made by successive governments are corrected, and as this report acknowledges, we’re dedicating significant resource to doing so. Anyone impacted will be contacted by us to ensure they receive all that they are owed.

“Since we became aware of this issue, we have introduced new quality control processes and improved training to help ensure this does not happen again.”

The SNP said the error was the “latest in a long line of failings from the DWP” and urged the UK Government to ensure arrears are paid as quickly as possible.

David Linden MP said: “Once again, exposed by this investigation by the National Audit Office, we see women disproportionately affected by the poor decisions and incompetence of Whitehall.

“These mistakes and cruel policies, along with the triple-lock manifesto promise betrayal, put beyond doubt the fact that pensioners are being treated atrociously by this Tory Government.

“It is time for the Tories at Westminster to get a grip and make up for their multiple betrayals to our pensioners.”