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DWP reveal new ‘catalogue of blunders’ on state pensions in new FOI response

Pensions & benefits Personal finance

A new Freedom of Information reply obtained by LCP partner Steve Webb has revealed a series of state pension errors by the DWP prior to the current large-scale correction exercise. The errors range from those affecting a handful of people to multi-million-pound blunders, and several had not previously been made public.

Two major state pension blunders have previously been made known to the public and were subject to large scale rectification programmes:

  • A large-scale correction of cases where parents were due ‘home responsibilities protection’ for time at home with children but this was never mapped onto their state pension record; the correction exercise ran from 2009-2011, benefited around 36,000 people and resulted in £83m in arrears being paid (see: Microsoft Word - 110615 - HRP correction exercise ad hoc analysis - FINAL.d… (publishing.service.gov.uk));
  • The current correction exercise running 2021-23, designed to identify 134,000 pensioners who have been underpaid state pensions and are owed around £1 billion in backpayments.

However, the FOI reveals a further six errors in state pension payments since 2007. The most important of these include:

  • An error affecting people who reached pension age under the old system and whose partner reached (or would have reached) pension age under the new system and has now died; an error was made in the way these payments were uprated;
  • Under the new state pension women who paid the ‘married woman’s stamp’ (technically known as the ‘reduced rate election’) may qualify for a concessionary rate of payment if they are married, divorced or widowed and would otherwise get a low pension in their own right; in 2019, three years after the new system came into force, it was noticed that some married women were not being paid this transitional amount in line with their legal entitlement; however, cases are still emerging where women are not being paid the correct amount under these special rules.

The FOI also reveals some much smaller errors including entering incorrect figures for maximum pensions, some small underpayments of State Second Pension and errors where people had unusually large amounts of deferred state pension.

Commenting, Steve Webb, partner at LCP, said: “Whilst anyone can make a mistake, what is worrying about this catalogue of errors is how long it can take for anyone to spot that anything is wrong. In one case it was three years after the new state pension was implemented before anyone spotted a systematic problem with the payments to certain married women. It is also surprising that information about these errors and correction exercises has not previously been made public. DWP need to improve on two fronts – better error checking to make sure people are not paid the wrong pension in the first place, and greater transparency so that the public is told when things have gone wrong”.

** ENDS **

Note to editors: The full FOI reply is below:

Dear Steve Webb,

Thank you for your Freedom of Information (FoI) request received on 9 March. You wrote:

“Whilst I am surprised that the Department has to undertake so many correction exercises that providing the information I have requested would be disproportionately time consuming, I am happy to narrow the scope of my request. I will remove the request for estimated numbers affected and remove the request for AME costs to put things right. This reduces my request to the following: “I am aware that the department periodically undertakes correction exercises, such as the current LEAP exercise on state pension underpayments and the exercise (referenced in an earlier FOI) to correct errors relating to missing ‘home responsibilities protection’. Aside from these two examples, I would be grateful if you could let me have a list of any other correction exercises undertaken in the last 15 years relating specifically to the state pension (including SERPS). For each, I would be grateful for a description of the nature of the error and how it arose” If answering this question would still exceed the cost limit, I would be content for you to include details of exercises starting in the present day (excluding the current LEAP exercise) and going back as far as possible within the overall cost limit.”

DWP Response

I can confirm we hold the recorded information to respond to your request. Please see the table below, which includes information on correction exercises dating back to 2007.

Name of Exercise

Summary of issue

State Second Pension (S2P) Underpayments

This issue, identified via a staff query, related to the way in which the HMRC IT system calculated S2P amounts for some individuals. This resulted in small underpayments of S2P.

Incorrect Maximum Additional State Pension Value (2010/11)

During the 2010/11 uprating exercise an incorrect rate of maximum Additional State Pension was input into the system. The correct amount was £158.83, but £157.74 was used instead.

New State Pension – Revaluation/Uprating of Inherited “old rule” amounts

This issue affects awards of inherited State Pension where the survivor is receiving their State Pension under the “old rules” (i.e. they reached State Pension age before 6 April 2016) and their deceased partner was or would have received their State Pension under the “new rules” (i.e. they reached or would reach their State Pension age on or after 6 April 2016).

The IT system had incorrectly applied new State Pension revaluation/uprating rules instead of the pre 2016 rules to the inherited amounts.

Reduced Rate Election (RRE) – Transitional Amounts

It was identified late in 2019 that some married women were not receiving the RRE transitional amount they should be getting in accordance with the law.

Underpayments of Deferral Amounts

The PSCS system had a field limit of £99.99 for deferral increments. This resulted in a very small number of State Pension customer only being paid the excess over the £99.99 limit and not the full increment value.

Equal Treatment Exercise for Transgender Women

Transgender women born between 31 October 1953 and 6 November1953 who had lived in their acquired gender for at least two years by October 2018 and have had gender reassignment surgery may be entitled to up to 6 days of backdated State Pension, as a result of a CJEU ruling. Prior to the exercise start date, Transgender women could only get their State Pension at the earlier female State Pension age if they had a Gender Recognition Certificate. State Pension ages equalised on the 6 November 2018.

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