The pension underpayments crisis

How would you know if you were owed money and what can you do about it?

New government figures suggest that there is £1.5 billion owing from underpaid state pensions. But how can you tell if you, or a relative, has been affected, and what can you do about it?

This guide can help you to find out.

What has happened?

237,000 women are believed to have been underpaid their state pensions and could be due a refund. The problems are due to a variety of issues, including computer problems.

Some will receive automatic payouts, but in some cases people will have to contact the pensions department to claim.

Some 80 year old men and women have also been underpaid due to a separate issue.

How will I know if I am affected?

It is all to do with your financial situation and age. The most likely to be affected are widows, those who are divorced and those who relied on their husband’s national insurance contributions to qualify for some of their state pension.

Check whether you fall into any of the following categories:

1. Women who were born before April 1953 and were married.

Under an old system, married women could claim up to 60% of their husband’s basic state pension if it was higher than they would otherwise be entitled to. This system applied only to those who reached state pension age before April 2016, ie they were born before April 1953.

If this applies to you and you receive less than 60 per cent of your husband’s state pension you could be due a refund.

If you fall into this category and your husband reached the age of 65 before 17 March 2008, you will have to apply to have your pension enhanced, and this will be backdated by 12 months. If he reached 65 after that date you should be automatically compensated.

2. Widows born before April 1953 whose state pension remained the same after their husband died

You can inherit part of your late husband’s state pension, so your pension should usually go up after the death of your husband. If yours did not, you may be due a refund.

Likewise, even if your pension is correct now, if you received less than your entitlement while your husband was still alive (i.e. 60 per cent of his state pension) you may have been underpaid.

3. Divorced women born before April 1953

If your husband had a full National Insurance record at the time you divorced but you do not receive the equivalent of 60 per cent of his state pension, you may be being underpaid.

4. Those over 80 of either sex who do not receive a state pension of £85 or more a week.

5. If you are the widower or heir of someone in this situation

If a family member of yours was underpaid their pension, you are able to receive the repayment. So if you think a late family member of yours might have been in one of the situations above, it is worth making an enquiry.

What should I do if I think this applies to me?

The Department for Work & Pensions (DWP) is going through its systems and should repay people in many of these situations automatically. However, this takes time and relies on the government having the correct information.

In some cases you will have to contact the DWP, while in others you can wait.

Those who must get in touch include

  • Women who got divorced over pension age
  • The heirs or widowers of those who may have been affected.

How can I make a claim?

If you are over 80 and receive less than £85 a week, you can claim here:

If you are the heir or next of kin of someone who you think may have been underpaid you can make an enquiry here

If you are divorced or your husband reached the age of 65 before 17 March 2008 and you did not receive 60 per cent of his pension, you will need to call the Pensions Service on
0800 731 0469 to see if you can claim.

Where can I find more information?

The Government’s Money Helper service has more advice on pension underpayments, so you can find out what to do.