Handling of pensions errors ‘a shameful shambles’

A Parliamentary committee has labelled the Department for Work & Pensions’ handling of pensions errors a “shameful shambles” in a report out today.

The DWP estimates it has underpaid 134,000 pensioners, mostly women, over £1 billion of their State Pension entitlement, with some of the errors dating as far back as 1985.

The public accounts committee report says the errors, which mostly affect widows, divorcees and women who rely on their husband’s pension contributions for some of their pension entitlement, happened because of the Department’s use of outdated systems and heavily manual processing.  Small errors that were not recognised each time added up over years to significant sums of money, it states, adding that, since 2018, the DWP has launched several exercises to correct the errors over the years, the most recent in January 2021.

The DWP only contacts pensioners when it finds through these exercises that they have been underpaid. The report notes that it admits that many more are not receiving their due – these “risk missing out on significant sums”, with “little guidance for those currently claiming State Pension who are concerned that they have been underpaid” and people left “in the dark over their entitlement”.

Moreover, it notes that there is currently no formal plan for contacting the next of kin where a pensioner who was underpaid is now deceased.

The report states: “DWP is only paying those it has identified as having a legal entitlement to arrears, in some cases many years after the event, and has been inconsistent in paying interest. It has shown little interest in understanding the further knock-on consequences, including on social care provision, for those it underpaid.”

Fixing the mistakes is expected to cost £24.3 million in staff costs alone by the end of 2023, with experienced, specialised staff being  moved away from business-as-usual and backlogs in processing new applications building up. The report says there remains a risk that the errors that led to underpayments in the first place will be repeated in the correction exercise, if not also in new claims.

Dame Meg Hillier MP, Chair of the Public Accounts Committee, called the errors a “shameful shambles” and said the DWP needs to set out the changes it will make to ensure they don’t happen again. She stated: “For decades DWP has relied on a State Pension payment system that is clunky and required staff to check many databases – and now some pensioners and the taxpayer are paying in spades. 

“Departments that make errors through maladministration have a duty to put those it wronged back in the position they should have been. In reality DWP can never make up what people have really lost, over decades, and in many cases it’s not even trying. An unknown number of pensioners died without ever getting their due and there is no current plan to pay back their estates.”

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