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14 Apr 2022

Six state pension errors uncovered - could you be owed money?

A freedom of information request has found errors dating back to 2007
Couple checking their pension statement

A further six state pension errors made by the Department for Work and Pensions (DWP) have been uncovered.

A Freedom of Information (FOI) request by the former pensions minister Sir Steve Webb revealed the errors that date back to 2007 and range from affecting a handful of people to multi-million-pound blunders.

Here, Which? look at what new errors have been uncovered and how to check you are getting the right amount of state pension.

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What are the new pension errors?

The main errors uncovered affect the following groups of people:

Widows and widowers

An error affecting people who reached their state pension age under the old system (before 6 April 2016) and whose partner reached, or would have reached state pension age under the new system (After 6 April 2016) and has now died.

According to the FOI, the IT system had incorrectly applied new state pension revaluation/uprating rules instead of the pre 2016 rules to the inherited amounts.

Women who paid the 'married women's stamp'

Under the new state pension, women who paid the 'married woman's stamp' technically known as the 'reduced rate election' may qualify for a concessionary rate of payment if they are married, divorced or widowed and would otherwise get a low pension in their own right.

In 2019, three years after the new system came into force, it was noticed that some married women were not being paid the transitional amount in line with their legal entitlement.

According to Webb, cases are still emerging where women are not being paid the correct amount under these special rules.

Smaller errors made

The FOI also revealed some smaller errors including some underpayments of state second pensions and of deferral amounts. It is not clear how many people are affected by these issues or how much they might be owed.

  • Backdated state pension for transgender women: transgender women born between 31 October 1953 and 6 November 1953 who had lived in their acquired gender for at least two years by October 2018 and have had gender reassignment surgery may be entitled to up to six days of backdated state pension as a result of a Courts of Justice of the European Union (CJEU) ruling. Prior to the exercise start date, transgender women could only get their state pension at the earlier state pension female age if they had a Gender Recognition Certificate.
  • Underpayment of second state pension: this issue was identified by a staff query and related to the way the HMRC IT system calculated the second state pension for some individuals meaning they were underpaid. The state second pension was a top up to the old basic state pension and was previously known as state earnings-related pension scheme (Serps) before 2002.
  • Underpayment of deferral amounts: the DWP says the 'pension strategy computer system' (PSCS ) had a field limit of £99.99 for deferral increments which means a small number of pensioners only got paid the excess over the £99.99 limit and not the full increment value.
  • Incorrect maximum figure used: during the 2010-11 uprating exercise an incorrect rate of maximum additional state pension was input into the system. It should have been £158.83 but £157.74 was used instead.

Find out more:how much state pension will I get

What should I do if I have been underpaid?

If you're a transgender woman born between 31 October 1953 and 6 November 1953 you can apply for six days of backdated state pension on the government website. You will need some documents to provide proof of your eligibility.

If you feel you may have been affected by the other errors, the DWP told us you should be paid automatically.

If the correction requires additional information, you will have already been contacted or will be in due course. You do not need to contact the DWP.

Concern over transparency

Steve Webb, a partner at pensions consultancy firm Lane, Clark & Peacocks, and who first identified the state pension underpayment scandal, has raised concerns over transparency from the DWP.

He said: 'In one case it was three years after the new state pension was implemented before anyone spotted a systematic problem with the payments to certain married women.

'DWP need to improve on two fronts - better error checking to make sure people are not paid the wrong pension in the first place, and greater transparency so that the public is told when things have gone wrong.'

In response, a spokesman from the DWP said: 'This year we will spend over £100bn on the state pension and our priority is ensuring every pensioner receives all the financial support to which they are entitled.

'These correction exercises highlight how, where errors do occur, they are identified and rectified.'

Update on women's state pension scandal

Last month the DWP gave a progress update into the scandal surrounding the groups of women who have been underpaid their state pension.

In January last year, the DWP started an official exercise to correct the errors, called a Legal Entitlements and Administrative Practices (LEAP) process. This is due to be complete by the end of 2023.

So far the government has paid £94.3m to those who reached state pension age before 2016 and are entitled to further payments which should have been paid automatically.

Between January 11 2021 and 28 February this year, the DWP identified 14,329 underpayments. This is an increase on the 9,491 underpayments totalling £60.8m it had identified between January and September last year.

Overall, DWP estimates it has underpaid 134,000 pensioners, which are mostly women, and has set aside £1bn to fix the issue by 2023.

In January this year a public spending watchdog said state pensioners had been 'left in the dark' over their entitlement and urged clearer guidance to be issued.

Listen: our experts delve into the state pension scandal on the Which? Money podcast

How much state pension should I get?

If you reached the state pension age after 6 April 2016, you will get the new state pension.

This month the full level of the new state pension went up by 3.1% taking it to £185.15 a week, or £9,627.80 a year.

If you reached the state pension age before 6 April 2016, you receive a basic state pension. This is £141.85 a week in 2022-23 (£7,376.20 a year).