Your State Pension might not be something you give much thought to. You’ve worked hard and made regular National Insurance contributions (NICs) throughout your life, so you assume the correct State Pension will be ready for you to claim when you retire.

Unfortunately, a significant number of women (and some men) have found this not to be the case.

According to research reported by homecare.co.uk, more than 230,000 women may have received lower State Pension payments than they were entitled to due to an error by the Department for Work and Pensions (DWP).

Read on to learn more and find out if you or your loved ones might have been affected.

The pension underpayment crisis explained

In 2020, This is Money and former Pensions Minister Steve Webb launched an investigation into a reader’s question about her State Pension. They discovered that a significant number of retired women may have been underpaid their State Pension for decades.

This was largely due to computer errors at the DWP, caused by outdated systems and incorrect record-keeping.

As a result, the DWP failed to automatically increase payments for some women when:

  • They turned 80
  • Their husbands reached State Pension Age
  • Their husbands died.

The DWP has admitted to significant underpayments and launched an official repayment programme on 11 January 2021.

As of September 2024, the government has identified 119,050 underpayments, equating to a total of £736 million.

Women who reached State Pension Age before April 2016 are most likely to be affected

The underpayment crisis only affects individuals who reached State Pension Age before April 2016 and were eligible for the former, “basic” State Pension.

If you reached State Pension Age after this date, you’ll likely be receiving the new State Pension and won’t be entitled to claim any back pay.

The main groups affected are:

  • Married women with low pension entitlements who reached State Pension Age before April 2016
  • Widows whose pension was not increased when their husband died
  • Married women whose husbands turned 65 before 17 March 2008
  • Women who divorced after retirement, provided they have not remarried
  • Heirs of women whose State Pension may have been underpaid during their lives
  • Women aged 80 whose basic State Pension is less than £82.45 a week, provided they satisfy a residency test
  • Women in receipt of the graduated retirement benefit (GRB), under the scheme which ran from 1962 to 1975.

It’s important to note that while the crisis primarily affects women, some men have also been underpaid their State Pensions. For example, if you’re a man who is widowed and your spouse reached State Pension Age before April 2016, you may be eligible to make a claim.

The average arrears payment is more than £6,500

If you have been underpaid your State Pension, the amount you may be owed will be calculated using several factors, including:

  • The married women’s pension rate – Women who reached State Pension Age before April 2016 could claim up to 60% of their husband’s basic State Pension if it was higher than they were otherwise entitled to. If this applies to you and you received less than 60% of your husband’s State Pension, you might be due a refund.
  • How long you – or the person you are claiming on behalf of – were underpaid for
  • Individual circumstances – for example, if your husband deferred his State Pension, your payout may only be backdated to when he started drawing it.

According to the most recent government figures, the average payment is more than £6,500. However, as you can see from the chart below, payments vary between different groups of women, with widowed claimants receiving almost £12,000 on average.

Source: gov.uk

So, if you’re uncertain about whether you’ve been affected, it’s worth checking to ensure you’re not missing out on a potential redress that could benefit you during your retirement.

Find out if you or your loved one has been underpaid their State Pension

In February, the Daily Record reported that HMRC has sent out over 370,000 letters to older people, urging them to check if their State Pension income is lower than it should be.

Some people who have been affected by the DWP error will receive back pay automatically. However, many others will need to submit a claim.

The simplest way to find out whether you or a loved one might have been underpaid, is to contact the Pension Service by phone or letter.

Make sure you have any relevant information to hand, this may include:

  • Your name, date of birth and National Insurance number
  • The amount your receive as your current basic State Pension
  • Your husband’s name, date of birth, National Insurance number (and date of death, if this applies)
  • Your husband’s basic State Pension details.

You may benefit from seeking professional financial advice.

A financial planner can check whether you might qualify for back pay and help you navigate the claims process. If you do receive a payment, they can also support you to factor this into your long-term financial plan.

Get in touch

If you’d like help checking whether you’re entitled to back pay for underpaid State Pension or deciding how to make the most of a payout, please get in touch.

Email hello@intelligentpensions.com or call 0800 077 8807.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

All information is correct at the time of writing and is subject to change in the future.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.