DWP gives update on State Pension underpayment review progress and when all groups will be paid

A woman looking a documents

The Department for Work and Pensions (DWP) has shared an update on its efforts to correct historical State Pension underpayments, some dating back to 1978. Despite hundreds of thousands of older people, mostly women, being affected by errors, the DWP reassured that 99 per cent of State Pension payments are correct.

During a meeting on January 10, Peter Schofield, Permanent Secretary at the DWP, told MPs that the first two stages of the State Pension LEAP exercise were “largely complete at the end of December”. He added that it is “absolutely on track” to finish the underpayment exercise for all groups affected by the end of this year, Daily Record reports.

Women in categories ‘BL’ and ‘D’ may have been underpaid because their current State Pension payment does not include additional entitlements. This means thousands could be due backdated State Pension underpayments worth an average of £5,931.

Work and Pensions Committee member, SNP MP David Linden, highlighted that the UK Government has underpaid £1.2 billion in State Pensions. He asked when the remaining reviews will be completed, to which Mr Schofield replied: “On that exercise by the end of this year, the end of 2024.”

Mr Linden also brought up the issue of underpayments due to incorrect recording of Home Responsibilities Protection (HRP). This mostly affects women in their 60s and 70s. He said: “The second set of underpayments due to the failure to award Home Responsibilities Protection has affected 375,000 people who have been underpaid a total of £2.5bn over 30 years. What’s the government doing to remedy that?”

Mr Schofield explained that the DWP is working with HM Revenue and Customs (HMRC) to fix these underpayments. They are identifying people who claimed Child Benefit between 1978 and 2000 but were not awarded HRP, which affected their National Insurance record and State Pension payments.

Speaking to the Committee, he stated: “We need HMRC to correct the National Insurance record and then off the back of that, we need the opportunity to correct the State Pension off the National Insurance record so it’s HMRC’s action in the first place.” He revealed that HMRC has started contacting those potentially affected and created an online portal to guide them.

Katie Farrington, Director-General for Disability, Health and Pensions at the DWP told the Committee that the first batch of letters was sent out to 30,000 folks before Christmas. She commented: “Those are for the older group, of State Pension age, and then those will phase through with further groups. My understanding is the intention is to issue all of the letters across the next 18 months.”

She also mentioned, “The role of HMRC is to correct the National Insurance record and then we will then take any action that is then needed with the State Pension.”

The conversation then turned to the third batch of underpayments involving people who took Universal Credit but might have issues with their National Insurance Credits on their HMRC-held National Insurance record – which could affect their State Pension.

Neil Couling, from the Department for Work and Pensions (DWP), said: “We’ve sent 22 million records across 2023 to HMRC, so we’ve finished sending all our records over to HMRC. The cases are currently coming back to us, it’s not a large number.” He also mentioned that around 8,000 cases required some adjustment, amounting to about £2.5m.

He added that they don’t expect many corrections as it only affects a small number of people on Universal Credit who don’t have 35 credited years.

In 2020, the DWP realised some individuals hadn’t had their State Pension increased automatically when it should have been. This led the Department to investigate the issue.

There are three main types of State Pension underpayments:

Married (Cat BL)

Widowed (Cat B)

Over 80 (Cat D)

* An AI tool was used to add an extra layer to the editing process for this story.