Let's talk

Uncovering the scale of state pension injustice: Our journey so far

Pensions & benefits Impact DB pensions

Our purpose and ‘powering possibility’ vision puts being a responsible and impactful business right at the heart of who we are. This means using our expertise and curiosity in a way that is beneficial not only to our clients, but wider society.

Across LCP we’re using data in so many ways. It can provide a roadmap for how to improve systems and policy, but it’s also a powerful tool to hold government to account.

Over the last few years, we’ve spearheaded two major campaigns highlighting that many women have been underpaid state pensions due to errors. The state pension system is so complex that people simply can’t know for sure if they are on the right amount and it can be close to impossible to get information about the rules in plain English from official sources. We have stepped into the breach, using our skills to dive into the data and holding the government to account to fix the errors to ensure that people will get the money that is rightfully theirs.

We have been able to help large numbers of people so far, which has been hugely rewarding. But there is still more work to do.

How it started

In 2021, our inaugural State Pension Underpayment campaign had a huge impact.

Pension entitlement in the UK can be a complex area. Since the post-war National Insurance system was created, special provision has been made for married women who might be financially dependent upon their husbands in retirement. Millions of married women have been entitled to a basic state pension of 60% of the full rate by dint of their husband’s NI contributions. However, a combination of technical errors and the fact that some calculations were not automatic has led to many women who reached state pension age before 2016 not receiving what they are entitled to.

I first became aware of the issue through my regular weekly column for the ‘This is Money’ website. The initial column led to a huge response, with many pensioners relating their personal experiences. I soon realised that the issue was a more fundamental problem, impacting far more than a handful of women.

To better understand the problem and who was impacted, LCP submitted an FOI request to the DWP and analysed official data. The findings were published as a paper in May 2020 and it concluded that tens of thousands of women were potentially missing out on millions of pounds in underpaid state pensions. We also pointed out that other groups such as widows and the over 80s might also be missing out.

Over the following 18 months, we helped women in this situation to check their entitlements by creating a dedicated website. We engaged with MPs and the Work and Pensions Select Committee to put pressure on the DWP to acknowledge the extent of the problem and proactively identify affected women.

From being discussed by Martin Lewis on national TV to being debated in Parliament, the campaign gained traction across the UK, helping reunite women from Cumbernauld to Cornwall with, in some cases, six figure sums. This has led to a multi-year DWP correction exercise expected to pay out £1.1 billion to over 165,000 pensioners, mostly women. In one case, we were pleased to be able to help 100-year-old Margaret Bradshaw to receive a state pension for the first time, together with a back payment running into several thousand pounds.

What happened next

Over 2022-23, we followed up with our ‘Mothers Missing Millions’ campaign, further putting pressure on the government to act. 

Since 1978, the state pension system has included credits on the National Insurance records of people who took time out of employment because of family responsibilities (‘Home Responsibilities Protection’). There have been concerns in the past that some people – mostly mothers – were not getting this protection because of problems getting data from the Child Benefit computer onto the National Insurance computer.

DWP ran a correction exercise over a decade ago, and the problem was thought to have been fixed.

However, buried in their 2022 annual report, DWP admitted more people may be missing out. Some women have been refused any pension at all but should have been getting thousands of pounds a year. It was estimated that £1bn was owed to about 210,000 people, of which 43,000 have died. That would equate to an average shortfall of about £5,000 each.

We launched our Mother’s Missing Millions campaign in September 2022 to raise awareness of the issue and help people fix the problems for themselves, rather than waiting for the government. You can listen to my interview on BBC Radio 4 Woman’s Hour and read the initial article published on BBC News. Our website includes a three-step guide to see if this issue applies to you and, if so, how you can get it put right.

We have since heard from a number of people who successfully secured a higher pension and a backdated lump sum. In one case, Lorraine Wainwright, 68, from Gloucestershire, was given a lump sum of around £1,500 and her regular state pension has now increased by more than £20 per week.

Where are we now?

The process of correcting state pension errors began nearly three years ago but still only around half of the money owed has been paid. Figures from DWP released In November last year showed welcome progress in fixing state pension errors, with a running total of £497 million having been paid out to 82,323 pensioners in respect of errors to widows, married women and the over 80s.

DWP still has a mountain to climb when it comes to paying all pensioners the amount that they are due. It is vital that the process of fixing these errors continues to accelerate and that measures are taken to prevent the reoccurrence of such large-scale underpayments.