DWP State Pension update as 97,000 people receive back payments of up to £12,486

The Department for Work and Pensions (DWP) has just released a new report on the advancement of the State Pension Underpayments Legal Entitlements and Administrative Practice (LEAP) operation. Most recent statistics reveal that 97,016 State Pension recipients, largely women, have bagged back payments averaging £2,192, £5,713 and £12,486, subject to their pension category.

The fresh data uncovers that between January 11, 2021 and February 29, 2024, some 705,688 State Pension accounts were vetted for potential mistakes with a cumulative £571.6 million due in underpayments.

This LEAP process progress updates information for four categories, namely, married women (category BL), individuals in a civil partnership, widows and individuals over 80 years of age (category D). These case assessments were slated for completion prior to year end 2023 and were allegedly "on track" for rectification by the end of this calendar year.

Hargreaves Lansdown's retirement analysis head Helen Morrissey commented: "Progress is being made to rectify the large-scale issue of state pension underpayments, but it is very slow. Just over £571m has been returned so far but with estimates suggesting the scale of underpayments could be around £1.5bn there's still a very long way to go.

"People have the expectation that the state pension they receive is correct but a series of errors in an already overly complicated system means that for many thousands of people this expectation has been incorrect. Some who queried the issue with DWP over the years were told there was no problem, and many have suffered real financial hardship as a result. These people have been let down and need resolution as soon as possible.", reports the Daily Record.

In 2020, the Department for Work and Pensions (DWP) realised that a number of individuals had not received the automatic increase in their State Pension as required by law, prompting an investigation into how widespread the issue was.

The State Pension underpayments fall into three main categories:

• The State Pension LEAP is the DWP’s largest underpayment correction exercise in progress. It has been established to identify where State Pension underpayments may have occurred in respect of the following groups of people:

  • Category BL (Cat BL) - People who are married or in a civil partnership who reached State Pension age before April 6, 2016 and should be entitled to a Category BL uplift based on their partner’s National Insurance contributions.

  • Missed conversions - People who have been widowed and their State Pension was not increased to include any amounts they are entitled to inherit from their late husband, wife or civil partner.

  • Category D (Cat D) - People who reach age 80 and who are getting some Basic State Pension but less than the £85.00 (in 2022-23) and may therefore, subject to satisfying the appropriate residency conditions, be entitled to Cat D State Pension of £101.55 a week.

State Pension underpayment progress - February 2024

The number of cases reviewed, arrears identified and payments made between January 2021 and February 2024 are listed below.

Married (Cat BL)

• Cases reviewed: 317,955

• Underpayments identified: 43,367

• Average arrears: £5,713

• Total amount repaid: £243.8 million

Widowed (Cat B)

• Cases reviewed: 298.099

• Underpayments identified: 21,175

• Average arrears: £12,486

• Total amount repaid: £262.3 million

Over 80 (Cat D)

• Cases reviewed: 89,634

• Underpayments identified: 32,474

• Average arrears: £2,192

• Total amount repaid: £65.5 million

The DWP has estimated that due to errors in recording Home Responsibilities Protection (HRP), it underpaid between £300 million and £1.5 billion of State Pension. In September 2023, HM Revenue and Customs (HMRC) began contacting thousands of older individuals who may have been underpaid their State Pension due to missing information on their National Insurance (NI) record. This issue predominantly affects women in their 60s and 70s who may have HRP missing from their NI record.

HRP was a scheme intended to safeguard the State Pension entitlement of parents and carers. It was replaced by NI credits from April 6, 2010. HMRC is utilising NI records to identify as many people as possible who might have been entitled to HRP between 1978 and 2010 and have no HRP on their NI record.

After May 2000, including a NI number on claims became mandatory, so those claiming after this point will not have been affected. It's estimated that tens of thousands of people are due an average of £5,000 in back payments. Personal representatives can claim on behalf of deceased customers. For more information on eligibility and how to claim, visit the dedicated HRP page on GOV.UK here.

State Pension National Insurance Credits.

Some individuals who received Universal Credit may not have had their National Insurance Credits correctly attributed to their National Insurance record held by HMRC, which could impact their State Pension.

HMRC maintains National Insurance records based on information from employers through PAYE, Self-Assessment tax returns from the self-employed and data provided by DWP on benefit receipt where that creates a National Insurance credit.

From 2017-18 to 2022-23, Universal Credit entitlements could not be processed by the National Insurance Recording System. As National Insurance credits can impact the value of a State Pension award, there was a risk that some individuals who had claimed Universal Credit and subsequently reached State Pension age may have been underpaid.

During this time, the DWP implemented a manual system with HMRC to update an individual's National Insurance record where they believed they qualified for National Insurance credits due to time spent on Universal Credit.

Now that the issues between the DWP and HMRC systems have been resolved, claims data relating to the affected years can now be successfully processed by HMRC. Once these records are updated, information will be sent to the DWP who will then correct any affected State Pension awards.

How to check if you are affected or make a claim

Nearly 12.7 million people across Great Britain are claiming State Pension. Of this total, 9.7 million are receiving the Basic State Pension and 2.9 million are on the New State Pension.

The Basic State Pension can fetch up to £169.50 weekly, while the New State Pension can go up to £221.20.

To swiftly determine if you've been underpaid your State Pension, a phone call to the pension service is recommended. The ideal number to dial is 0800 731 0469, and comprehensive contact details are available on the Gov.uk website.