The Department for Work and Pensions (DWP) has said that it expects to complete its state pension underpayment correction exercise by the end of 2024, although work to address Home Responsibilities Protection (HRP) errors are set to continue until 2027/28.

The DWP’s annual accounts revealed that the cost of the state pension increased by 13 per cent, around £14bn, compared to 2022/23, rising to £124.1bn over the past year.

In total, DWP estimated that it overpaid 0.1 per cent, around £170m, and underpaid 0.4 per cent, £470m, of state pension payments in 2023-24.

However, the DWP confirmed that the state pension legal entitlement and administrative practice (LEAP) exercise has now completed two of the three customer groups: the Cat BL (married) and Cat D (over 80s) cases.

In total, between 11 January 2021 and the end of March 2024, the checking process has identified 99,558 underpayments, with a total of £594m owed.

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 update, a total of £245.5m had been repaid to the 43,825 cases involving married women, with an average arrears amount of £5,693, while a total of £281.7m has been repaid to the 22,964 widowed cases, with an average £12,423 payment.

In addition to this, the DWP paid £66.6m in relation to the 32,769 cases involving those over 80, with an average arrears payment of £2,196.

The remaining cases are those where DWP is awaiting further information from a customer or a third party, and DWP confirmed that the expectation is for the exercise to be completed for the third group, missed conversions, by the end of 2024.

However, the DWP is still working with HM Revenue and Customs on the HRP correction exercise, with the annual report confirming that HRP LEAP exercise is still in its early stage.

The error around HRP arose because many Child Benefit claim forms submitted before 2000 did not include a National Insurance number and this means that the relevant HRP was not carried across from the Child Benefit computer to the National Insurance computer.

In total, the report estimated that DWP underpaid between £520m and £1,220m of state pension because of errors with the recording of HRP, suggesting that the number of people impacted by missing HRP state pension arrears is around 194,000, once adjusted for assumed take-up.

DWP said that the amount of time it will take to correct records is "uncertain", although it suggested that correction activity will continue until 2027-28.

However, it emphasised that HMRC is taking a proactive approach to correcting records, and DWP will pay any resulting arrears "as quickly as possible", taking into account the vulnerability of the customers impacted.

Despite this, industry experts have raised concerns about the pace of progress, with LCP noting that, by the end of March 2024, DWP had assessed 419 cases, with £2.2m in arrears so far been paid out compared with an estimated final bill of £1.15bn.

LCP partner, Steve Webb, said: “Once the government realised that nearly 200,000 mothers may have been underpaid their state pension, action should have been taken to fix the problem with much greater urgency, especially as many of those who have lost out are now elderly.

"Instead, DWP has so far assessed fewer than 500 cases out of that total, and the exercise is proceeding at a snail’s pace. When the government talks about continuing the exercise into 2027/28 it is clear that this issue is not getting the priority that it deserves”.

"With regard to the previous group of errors relating to married women, widows and the over 80s, which is due to be completed by the end of 2024, the annual report reveals that just under 100,000 people (99,558) had received payments by the end of March 2024, with a combined value of £594m.

"This total included around 44,000 married women, 23,000 widows/widowers and 33,000 over 80s.

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