UK Edition
Two hundred thousand women who were underpaid the state pension for years are due refunds totalling a “mind-numbing” £3bn.
It is the first time the Government has put figures on the number of people affected by a major oversight in the allocation of public retirement funds and its cost. The amount could be even greater, as official documents state “the true extent of the underpayment is not yet established”.
Some women who have already enquired if they were owed anything were shocked to receive astonishing six-figure sums.
Former pensions minister Steve Webb said a huge number of women had been “shortchanged”, describing the figures as “truly mind-numbing”.
The systemic underpayments date back in some cases to the early Nineties. They affect married, divorced, widowed and elderly women, whose husbands reached the state pension age before 2008. These women were entitled to “enhanced pensions” that boosted retirement incomes by up to 60pc, but many never got the extra money.
Now those unwittingly left without could be in for a payout, as the Government is due to hand over £500m every year until 2026 to cover the lost incomes, according to forecasts published by the Office for Budget Responsibility alongside the Budget.
It will be a major embarrassment for the Department of Work and Pensions, which identified the oversight between May and December 2020. It had previously said the issue only affected a small number of people and has drawn fierce criticism for not proactively seeking out women entitled to the payouts from day one.
Mr Webb, now of pensions firm LCP, who has campaigned on the issue, initially estimated the underpayments would tot up to around £100m.
“I had no idea it would explode into such a huge issue. Some of these women could be dead before they get what they are owed and some of them already are,” he said.
“The Government needs to devote serious resources to getting these repayments out quickly, as these women have waited long enough.”
The DWP is now proactively identifying all the women affected and has said it will pay out to everyone in full, but it warned the process would take many months to complete. A team of more than 155 civil servants is working directly on the case.
Families will inherit the payouts due to women who have died.
A government spokesman said: “The action we are taking now will correct the historical underpayments that have been made by successive governments and anyone impacted will be contacted by us to ensure they receive all that they are owed.”