Hundreds of thousands of women have lost out on state pension payments amounting to £100m and could be in line for thousands of pounds in reimbursements, analysis by a former pensions minister has found.
As many as 370,000 women in 2019-20 alone received a pension below the minimum entitlement of £77.45 per week, according to data obtained under a Freedom of Information request by Sir Steve Webb, partner at pension consultants LCP.
The shortfall in payments has been caused by factors including complex rules about the entitlement of women under the old pension system and computer errors by the Department for Work and Pensions (DWP), the LCP research said.
The issue affects women born before April 6 1953 — particularly widows, married or divorced women and those aged over 80.
Sir Steve said the women had been cheated out of their entitlement and called on the DWP to launch an urgent investigation into how so many had missed out on their full pension for so long.
“It is truly shocking that thousands of women are being short-changed on their state pensions,” Sir Steve added. “While the DWP is willing to put things right on a case-by-case basis when individuals get in touch, there is clearly a systemic problem here.”
Several women who took part in the research have since been reimbursed by the DWP. One woman, “Mrs H”, was awarded £8,800 in backdated state pension payments plus interest. Another, “Mrs T”, was awarded arrears of nearly £5,000 plus interest, the research from LCP said.
The total underpayment for all women who lost out on their full state pension entitlement over the years could amount to £100m, the report estimated.
The DWP said: “We are aware of a number of cases where individuals have been underpaid state pension. We corrected our records and reimbursed those affected as soon as errors were identified.
“We are checking for further cases and if any are found awards will also be reviewed and any arrears paid.”
State pension rules for married, divorced or widowed women were drawn up after the second world war and were in place until April 5 2016. They allowed a married woman to claim a pension based on her husband’s record of national insurance contributions.
Assuming that the husband had a full record of contributions, his wife’s pension would be paid at 60 per cent of the rate of the full basic state pension — when the husband reached state pension age. In 2019-20 the full basic state pension was £129.20 per week, and the rate for married women claiming on this basis was £77.45 per week.
A similar system existed for widows and divorced women. A widow could substitute her late husband’s national insurance record for her own, thereby qualifying for 100 per cent of the basic state pension if her late husband had a full record of contributions.
A woman who was divorced when she reached pension age could substitute her ex-husband’s NI record for her own, up to the point of their legal split. If the divorce occurred relatively late in life, this could enable her to qualify for a full basic state pension.
Until March 2008, a married, divorced or widowed woman would have to make a claim to receive this enhanced pension. The DWP said it would have written to such women when their husband turned 65 to prompt a claim. However, if a woman did not claim a pension uplift at the time she would continue to receive her own — typically lower — pension indefinitely. Even if she later realised and made a belated claim, the rules mean she can only backdate the claim for 12 months — with any uplift for previous years irrevocably lost.
From March 2008, the rules changed to ensure married women would automatically receive the 60 per cent rate on their husband’s NI contributions as soon as their husband turned 65.
But data obtained from the DWP by Sir Steve under an FOI request showed that hundreds of thousands of women who would be eligible for an enhanced pension were not receiving the minimum entitlement.
“In the majority of cases it seems likely that this is because they did not actively claim the uplift, but in some cases it will reflect the failure of DWP computers to automatically award the uplift,” the LCP report concluded.
Married women who should have received an automatic uplift after March 2008 but did not can receive full reimbursement. However, those who would have been entitled to an uplift before 2008 but did not claim it can only reclaim 12 months of backdated pay.
Sir Steve urged the government to identify and alert women who could fall into either situation and to consider fully reimbursing all of those affected.
LCP has created an online calculator for women to check whether they are eligible for reimbursement.