State Pension Underpayments – March 2021

Alongside recent Budget publications, the Office for Budget Responsibility (OBR) published an update on economic and fiscal outlook. Contain within was news that the “DWP has also identified underpayments of state pension relating to entitlements for certain married people, widows and over-80s back to 1992. Our forecast reflects an initial estimate that it will cost around £3 billion over the six years to 2025-26 to address these underpayments, with costs peaking at £0.7 billion in 2021-22.”

Also contained was an announcement about a state pension underpayment correction: “An administration error identified in March 2020 suggested that a small number of people had been underpaid in the ‘category BL’ element of the state pension. The underpayment affected married women whose husbands reached pensionable age before 2008 and who were unknowingly entitled to ‘enhanced pension’ that would have boosted their payments by up to 60 per cent. DWP investigations between May and December 2020 uncovered a systematic underpayment of state pensions, meaning tens of thousands of married, divorced and widowed people may have been underpaid since 2008. A repayment programme began on 11 January 2021… some of which are expected to fall outside the forecast period. This costing is subject to a high degree of uncertainty as the true extent of the underpayment is not yet established.”

There could be systematic underpayment of pension to thousands of pensioners covered by the old state pension (Pre-April 2016). The pension consultancy Lane Clark & Peacock has an informative web page on the subject:

Although the DWP are carrying out an major investigation to identify underpayments, we recommend that anyone who has concerns about this to contact the Pension Service directly to ensure their case is not overlooked: