Tens of thousands of state pensioners handed £6,400 payout after being underpaid by DWP

The updated underpayment figures were released by the DWP today

Tens of thousands of state pensioners have received a total of £300million after being underpaid by the Department for Work and Pensions (DWP).

Figures released by the DWP today showed that 46,716 state pensioners have been identified as having underpayments to their state pension, with £300.1million having been paid to by the DWP to those affected.

That’s the equivalent to about £6,424 per case.

The amount of people identified as having underpayments has increased since the last release in November last year, which reported 31,817 people as having been underpaid.

However, many more could still be affected as it’s estimated that as many as 237,000 pensioners were underpaid.

In total, the National Audit Office (NAO) predicted that about £1.46 billion had not been paid in state pensions.

Commenting on the DWP’s release, Helen Morrissey, head of retirement analysis at Hargreaves Lansdown said: “The DWP is making progress in dealing with state pension underpayments but there’s a mountain still to climb.

“However, with estimates suggesting as many as 237,000 pensioners have been underpaid £1.46billion it is clear this is a situation that is not going to be resolved any time soon and in the meantime, thousands of pensioners are getting less than what they are entitled to.”

Those who are mainly affected by the underpayments were women retiring under the old state pension system, so before April 2016.

Some of the errors have been found to date back as far as 1985.

The main three groups of people being underpaid are:

• Married women, who should have received an upgrade to a 60% basic state pension when their husband retired
• Widows (and widowers) who should have inherited an enhanced state pension when their spouse died
• Over 80s already getting a state pension when they turned 80, who should have been automatically upgraded to a 60% basic state pension

The DWP’s release showed that 22,276 married pensioners received an average of £6,630 each, in a total payout of £147million.

There were 14,512 over-80s that got an average of £2,710, totalling £39million, and 9,928 widowed pensioners were paid out an average of £11,521 each in a £113million payout.

Tom Selby, head of retirement policy at AJ Bell said: “With many retirees struggling to make ends meet as inflation eats away at their living standards, a cash windfall worth thousands of pounds could prove a lifeline after years surviving on an artificially low income due to the DWP’s errors.

“Once compensation has been paid, the government needs to undertake a comprehensive review of its processes to ensure these mistakes are never repeated.

“Trust in pensions is fragile at the best of times and failures such as this will not help. Sadly, it will likely take years, if not decades, to rebuild the confidence lost as a result of this scandal.”

In a statement to Yahoo News, the DWP said: “In 2020, the Department for Work and Pensions became aware of a number of individuals who had not had their State Pension increased, in accordance with the law, automatically when this should have occurred.

“This prompted the department to take action to investigate the extent of the problem.”

Mirror Money has contacted the DWP for comment.