Retirees miss out on around £1bn in state pension payments

Over 200,000 pensioners, mostly women, have been underpaid state pension by up to £1.5 billion because they took time out of the workplace for caring responsibilities before 2000 because of child benefit errors, according to a National Audit Office report.

The reports says its estimates of the amount of money underpaid are uncertain. It says the issue involves people who received child benefit before 2000 and whose National Insurance record was not updated to reflect the Home Responsibilities Protection [HRP] scheme in operation at the time. The scheme was designed to help protect parents’ and carers’ State Pension for periods when they took time out of work.

A Government spokesperson said: “We have identified and are correcting an issue related to the historical recording of Home Responsibilities Protection on the National Insurance records for people who first claimed Child Benefit before May 2000. Most people’s records will be unaffected, and we will shortly be launching a new online tool to help people check whether they need to claim. HMRC will also begin writing to those likely to be affected from the Autumn.

“Our priority is ensuring everyone receives the financial support to which they are entitled, and State Pension underpayment rates due to Official Error remain low at 0.5% of expenditure. Where errors do occur, we are committed to fixing them as quickly as possible.”

The National Audit Office report also outlines underpayments of up to £1.2 billion due to historical official errors relating to married pensioners, widows and people aged over 80. DWP first reported on this in 2020-21, and since then it has paid around 28% (£324 million) of the missing payments it estimates are due. These issues relate to where some married pensioners, widows and people aged 80 and above are being underpaid because their current payment is missing an additional entitlement.

The  report says the estimated amount of benefits underpaid by DWP increased to 1.4% (£3.3 billion) in 2022-23, the highest level on record. This compares with 1.2% (£2.6 billion) in 2021-22. It says this was mostly due to claimant error in Personal Independence Payment (PIP) linked to claimants failing to update DWP that their medical needs had increased. DWP’s estimate of underpaid PIP increased to 5.1% (£900 million) in 2022-23 from 3.8% (£570 million) in 2021-22. DWP says it is working to determine the reason for the rise in PIP underpayments since the start of the pandemic but says that this may reflect the wider take-up of PIP and poorer health in the population since the pandemic.

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