Tens of thousands of married, divorced and widowed women wrongly underpaid their state pension could get their money back much sooner than expected.
In March, the government announced that women are due to receive payments totaling around £3bn over the next six years, but the process could be complete by the end of 2023.
Last week pensions minister Guy Opperman confirmed that the Department for Work and Pensions (DWP) is taking on an additional 360 members of staff, in addition to the 150 people already working on the issue.
This issue – first raised by pensions consultancy Lane, Clark & Peacock (LCP) last May – has been caused by a combination of complex rules about women’s entitlement under the old state pension system and computer errors made by the DWP.
Here, Which? looks at what actions the government is taking to resolve the issue, why some women aren’t receiving the right state pension income and how you can check if you’re eligible.
What is the government doing to set things right?
The DWP has been reimbursing women since the issue came to light last year, by checking its own records and through women calling to check what they’re owed. Although, according to the Office for Budget Responsibility (OBR), an official repayment programme began on 11 January 2021.
In his most recent statement, Opperman said that the government is ‘fully committed to ensuring that any historical errors are addressed as quickly as possible to ensure that individuals receive the state pension they are rightfully due in law’.
He also said that while ‘good progress has been made in the examination of cases, this is a complex resource-intensive process requiring the clerical examination of many thousands of state pension records’.
Opperman added: ‘it is important to note that estimates on the numbers affected, and costs, are currently based on highly complex scans of the computer system, analysis of DWP administrative data and very small samples of cases randomly selected and reviewed.
‘They are highly uncertain and will be further refined by our analysts as the correction activity progresses and we are able to base estimates on management information gathered from cases actually reviewed and corrected.’
The DWP is now in the process of issuing letters to all those found to be underpaid in accordance with the law, explaining how much they will be receiving in arrears and the reasons for the change to their state pension rate.
- Find out more: how the state pension works
Who could be eligible to claim missing state pensions?
The issue of the missing state pension benefits affects women who were married and reached state pension age (SPA) before April 2016, who can claim the basic state pension.
These women are entitled to 60% of the basic state pension their husband gets at SPA. The full basic state pension is currently £137.60. So the rate for married women claiming on this basis would be £82.56 per week.
Under this system, each member of a couple could build up a pension in their own right. So, each member of a married couple could earn a full state pension. However, many women had gaps in their National Insurance (NI) record or had paid the specially reduced ‘married woman’s stamp’, and so reached pension age with very limited pension entitlement of their own.
The women affected will have been born before 6 April 1953 and are most likely to be widows, married or divorced women, and those aged over 80.
If you’re a widow, you could also substitute your late husband’s NI record for your own, so qualifying for 100% of the basic state pension if your late husband had a full record of contributions.
If you were divorced when you reached SPA, you could substitute your ex-husband’s NI record for your own, up to the point of your legal split. If the divorce occurred relatively late in life, this could enable you to qualify for a full basic state pension.
It hasn’t been specified how many women could be affected, but the DWP predicts it could be in the tens of thousands.
- Find out more: how NI contributions affect your state pension entitlement
Why have some women been underpaid?
There are two groups of married women who may have been underpaid state pension benefits.
Until March 2008, a married, divorced or widowed woman would have had to make a claim to receive an enhanced pension.
For women whose husbands reached SPA (which was then 65 for men) after March 2008, the DWP’s computer systems should have boosted their state pension payments to the 60% sum.
But many women had said that it didn’t and complained to the DWP.
The second group of women who have been affected are those whose husbands reached 65 before March 2008.
According to LCP, the DWP claims it wrote to these women to alert them of this option, but many say they never received such a letter.
- Find out more: state pension age calculator
Six groups of women that should take action
When the issue first came to light last year, LCP identified six groups of women who may have been underpaid, which still applies.
- Married women whose husband turned 65 before 17 March 2008 – if you never claimed an uplift to the 60% rate (currently £82.56 per week in basic pension), you could be missing out.
- Widows whose pension was not increased when their husband died – this group can potentially receive a 100% basic state pension of £137.60 per week, plus a percentage of their late husband’s additional state pension.
- Widows whose pension is now correct, but who think they may have been underpaid while their late husband was still alive – this is especially important if your late husband reached 65 after 17 March 2008.
- Over-80s – who are receiving a basic pension of less than £82.56, provided that they satisfied a basic residence test when they turned 80.
- Widowers and heirs of married women – where the woman has now died, but who was underpaid state pension during her life, especially where her husband turned 65 after 17 March 2008.
- Divorced women (particularly those who divorced post-retirement) – you should check that you’re benefiting from the contributions of your ex-husband.
How can I check if I’m eligible to claim?
Women who have been affected won’t need to notify the DWP.
However, even though you don’t need to do anything to claim back your cash, you can still check if you’re owed money by using LCP’s dedicated calculator.
You’ll need to enter some details about you and your husband (or husband at the time), including when you were born, whether your husband is over the SPA, how much basic state pension you currently receive and how much your husband (or ex-husband) receives.
You’ll then be given an indication of whether you’re receiving less than you’re entitled to. LCP says all data is given anonymously and it doesn’t store any of the personal data you input.
If you have any concerns or questions about your pension you should contact the government’s Pension Service.