Tens of thousands of UK pensioners are discovering they may have been underpaid by the government for years—some by as much as £12,000. The Department for Work and Pensions (DWP) has acknowledged a major failure in the state pension system, with over £800 million owed due to errors dating back decades. While efforts to fix the issue are ongoing, many pensioners remain unaware that they’ve been short-changed.
This scandal underscores persistent problems in pension administration, especially for certain groups like married women, widows, and people over 80. If you or a loved one may be affected, it’s essential to understand the issue and take action.
The Scale of the Problem
Since January 2021, a DWP review has uncovered 130,948 cases of state pension underpayments totaling £804.7 million. These errors stem from outdated administrative systems and a failure to adjust pensions following life changes—such as the death of a spouse or reaching a certain age.
Here’s a breakdown of the affected groups and their average underpayment:
| Group | Average Arrears |
|---|---|
| Widowed Pensioners | £11,725 |
| Married Women (Category BL) | £5,553 |
| Over 80s (Category D) | £2,203 |
Unfortunately, some of the pensioners affected have passed away, meaning their estates may not be eligible to recover the missed payments.
Who Is Most Affected?
Three groups account for the bulk of these underpayments:
Married Women (Category BL)
These women were entitled to receive 60% of their husband’s basic state pension once he reached retirement age. However, many were left on a lower rate because their pensions weren’t automatically updated, as they should have been.
Widowed Pensioners
When a spouse dies, the surviving partner may inherit part of their pension. Many cases revealed that this recalculation never happened, leaving widowed individuals with significantly less than they were entitled to.
Pensioners Over 80 (Category D)
UK pension rules provide a guaranteed minimum payment for those over 80, regardless of their National Insurance record. But many didn’t receive this increase due to administrative oversight.
Additional Issues: HRP Corrections
Another issue involves Home Responsibilities Protection (HRP)—a scheme designed to protect pension rights for those who took time off work to care for children or relatives. As of September 2024, 5,344 HRP cases have been identified, worth £42 million in unpaid pensions.
Pressure for Reform
The magnitude of the issue has sparked criticism and calls for accountability.
- Sir Steve Webb, former pensions minister, has been instrumental in exposing the failures. He warned that many underpaid pensioners have died without ever receiving what they were owed.
- Rachel Vahey, a finance expert at AJ Bell, described it as one of the worst benefit scandals in recent memory, stressing the need for urgent and fair compensation.
DWP’s Response
The DWP has acknowledged the problem and committed to fixing it. While most cases have been resolved, a small number remain under review, particularly where documents are missing or cases are complex.
A DWP spokesperson stated they are working to ensure retirees receive the financial support and dignity they deserve.
What You Should Do
If you suspect you or a relative might be affected:
- Review your pension records, especially if you’re a married woman, widowed, or over 80.
- Contact the DWP Pension Service to request a pension review.
- Gather documentation, such as your spouse’s pension details or death certificate.
- For help, reach out to Age UK, Citizens Advice, or a pensions specialist.
Even if you think your records are correct, a quick check could reveal entitlement to thousands in back payments.
This large-scale pension error has shone a spotlight on systemic issues within the DWP’s processes. While steps are being taken to rectify past mistakes, the incident serves as a wake-up call for pensioners to be proactive about their entitlements. Don’t wait—check your records and ensure you’re getting every penny you’re due.
FAQs:
How do I check if I’ve been underpaid?
Contact the DWP Pension Service directly or use their online service to request a review of your records.
Can relatives of deceased pensioners claim back payments?
In some cases, yes—but it depends on the estate’s legal rights and whether the error can be proven.
What is Category BL and D?
Category BL refers to married women entitled to a percentage of their husband’s pension. Category D refers to pensioners over 80 entitled to a minimum weekly pension regardless of their contributions.