It has been revealed that hundreds of thousands of women claiming pensions across the UK could be entitled to a government payout.
This comes after the Department for Work and Pensions revealed that errors going back to 1992 meant that many claimants had been underpaid. It means that vast numbers of women could be in line for an average payout of £13,500 covering underpayments for up to two decades.
Around 200,000 women could be in line for a payout following the blunder. The problems relate to automatic payment increases for women on enhanced pensions, including some married women, over-80s, and widows.
Huge overall bill expected due to errors
According to the DWP, the total bill to rectify the errors could come to £2.7 billion. The errors were made under the previous pension system, which had a special clause relating to married women.
Under the clause in the old system, married women with poor pensions were able to claim a basic state pension of 60%. This was based on contributions made by their spouses, and the payments should have been increased automatically. However, records show that this did not happen with some of the pensions.
Those who may have been affected by the error are women who reached pension age before 6th April 2016. The DWP is carrying out a review to determine which pensions were affected , and this will include the pensions of those that have died.
An DWP official 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."
It is thought that the review could take months to complete, as there are so many cases that will have to be looked at as part of the process.
A ‘truly shocking’ error
The scale of the pension underpayment errors was described as ‘truly shocking’ by the former pensions minister, Steve Webb. He said that he was pleased the issue was being looked into but that it needed to be done far more quickly. Webb also noted that the DWP planned to stop interest payments on the amounts owed, which he said was not fair treatment.
After the errors emerged last year, a special team with more than 100 employees was formed to deal with the investigation. However, the scale of the errors was only made public recently. It was highlighted in a report published at the same time as the Budget by the Office of Budget Responsibility .
In the meantime, the current pensions minister, Guy Opperman, has stated that the DWP is now treating the investigation as a top priority. He said that they would work through the process as quickly and efficiently as possible to ensure those affected receive the money they are owed.