The Department for Work and Pensions (DWP) has repaid £300.1m to individuals impacted by historical state pension underpayments as of 28 February 2023, having identified 46,716 underpayments.

The problems affected married women whose husbands reached pensionable age before 2008, as well as widows and those over 80, who were unknowingly entitled to an 'enhanced pension' that would have boosted their payments by up to 60 per cent.

According to the latest update on the issue, the DWP revealed that it had reviewed 173,538cases between 11 January 2021 and 28 February 2023, identifying a total of 46,716 underpayments.

In particular, a total of £147.7m has been repaid to the 22,276 cases involving a married woman, with an average arrears amount of £6,630, while a total of £113.2m has been paid in relation to the 9,928 widowed cases, with an average £11,521 payment.

In addition to this, £39.3m was repaid in relation to 14,512 cases involving over 80s, with an average payment of £2,710.

Despite the progress, industry experts have emphasised that there is still much more work ahead, with the latest DWP annual report, published in Summer 2022, estimating that the total amount which would eventually have to be paid would be £1.46bn to 237,000 people.

LCP warned that progress towards this target has been slow, estimating that, based on the rough current payment rate of £25m being paid out each month, it could take more than three more years to complete the task, with an end date somewhere in late 2026.

LCP partner, Steve Webb, stated: “The scale of these state pension errors is so great that DWP still has a billion pound mountain to climb in terms of identifying underpayments and putting them right. It is vital that the department devotes extra resources to make sure that huge numbers of people are moved on to the correct rate of pension as a matter of urgency.

“With the current cost-of-living crisis it is hard enough for older people to cope, without having to get by on a pension which is too low due to official error”.

Adding to this, AJ Bell head of retirement policy, Tom Selby, commented “While it is clearly positive the government has identified over £300m of state pension underpayments, this is still a long way short of the £1bn the National Audit Office (NAO) estimates is owed to pensioners.

“This saga is particularly tragic as many of the people affected will have been struggling unnecessarily for years. What’s more, the NAO estimated around 40,000 of the people who were due a repayment had died without receiving it.

“It is absolutely critical all those affected by this scandal receive the money they are owed as quickly and efficiently as possible.

“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.”

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