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Hundreds of thousands still owed state pension error refunds – are you eligible?

HUNDREDS of thousands of pensioners are still waiting for cash back after errors meant that they were underpaid.

Estimates suggest that 40,000 pensioners due money back have died before receiving it.

Thousands of pensioners are owed thousands in underpayments

The scale of the error has left over 237,000 retirees underpaid by more than £1billion in total, according to the Department for Work and Pensions (DWP).

And while the DWP has released the latest figures for its progress in setting things right – thousands are still owed money back.

Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown said: “The DWP has let pensioners down on a massive scale – particularly women who tend to retire on lower incomes anyway.

“What’s more, the National Audit Office estimated around 40,000 people who were due a repayment had sadly died without receiving it,” said Tom Selby, head of retirement policy at AJ Bell.

The DWP has been actively reviewing the state pension accounts of thousands to ensure that any underpayments are identified.

And of the 111,953 accounts checked between January 11, 2021 and October 31, 2022, exactly 31,817 underpayments were identified.

This means that £209million in state pension underpayments is owed back – equating to £6,958 per case.

Shockingly, some of these underpayments go as far back as 1985.

Those affected by the error identified by the DWP are pensioners who first claimed the state pension before April 2016.

These pensioners were also unlikely to have a full National Insurance record.

They should have received increases to the basic state pension but didn’t due to an error that the National Audit Office has blamed on complex rules and outdated IT systems that require claims to be made manually instead of being automated.

But some who have since passed away and their families may never get what they are owed.

The DWP has been contacting those affected by the errors, mostly women who are widowed, divorced or who have some of their entitlement based on their husband’s pension contributions.

But many people could still be missing out on significant sums because there is little guidance for those concerned they are being underpaid their state pension.

Mr Selby said: “While it is positive the government has identified over £200 million of state pension underpayments, this is still a long way short of the £1 billion the National Audit Office (NAO) estimates is owed to pensioners.

“This saga is particularly tragic as many of the people affected will have been struggling unnecessarily for years.

“It is absolutely critical all those affected by this scandal receive the money they are owed as quickly and efficiently as possible.”

Ms. Morrissey said: “The DWP has a gigantic task ahead of it to resolve these issues and it must pull out all the stops to make sure it happens as soon as possible.”

Who is affected by state pension underpayments?

Around 237,000 retired stay-at-home mums may have missed out on a pension hike when their husbands retired.

Their payments should have risen to 60% of their husband’s basic state pension, the amount women with low National Insurance contributions got under the old pension system.

In the previous tax year when the issue was first uncovered, they would get £80.45 a week, 60% of their husband’s £134.25 a week.

Instead, they are getting more like £67 a week.

The injustice only affects wives who retired before 2016. After this date, women’s pensions were no longer linked to their husbands.

How much you’ll get in compensation depends on when your husband retired.

If it was between April 2008 and 2016, you’ll get all your losses back as the Government should have increased your pension automatically.

Those whose husbands retired before 2008 had to apply for the extra cash, although in many cases they lost out because they didn’t know about it.

Women in this position can only get a year of backdated payments.

This online tool was launched by former pensions minister Steve Webb on behalf of actuarial firm LCP, after he first uncovered cases of women being paid the wrong state pension via his This Is Money column.

If you use the LCP calculator and think you’re eligible for a top-up in either scenario, then the DWP should pick up the error in their own records too.

The DWP started working to fix the problem on January, 11 2021 and says it expects to make repayments by the end of 2023.

If you are owed money, you’ll likely have to sit tight and wait for the DWP to send you a letter confirming your payment.

Those considered at “high risk” like those over 80 and widows are being prioritised.

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