Is your State Pension being underpaid? Thousands owed money as DWP to pay out £2.7billion

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The State Pension in the UK has changed several times over the years. The State Pension was first introduced into Britain in 1908 as the Old Age Pension, in which people qualified for five shillings (25p a week) when they reached the age of 70. Historically, the State Pension has always favoured men over women, and that seems to be a problem still being rectified today. Following pressure from the European Union (EU) in 1995, the Conservative Government was forced to announce plans to equalise State Pension age for men and women. The timetable was the most relaxed possible and aimed to raise pension age to 65 for women from April 2010 to April 2020.

Is your State Pension being underpaid?

There are a few groups, mainly women, who have had their State Pension underpaid for a number of years.

About 200,000 women could be in line for pension back-payments at an average of £13,500, after an investigation into the underpayment of State Pension over the last 20 years.

Some of the affected women were found to have received pensions as little as 86p a week, when they were in fact entitled to claim about £80 a week – 60 percent of the basic State Pension.

The issue is thought to affect women who retired before April 6, 2016, and received the old State Pension.

Based on their NI contributions, these claimants where only paid a poor pension.

But the rules remained and they were actually entitled to a better payout based on their husband’s contributions, something which should have been automatically applied.

The average backdates payment will be £13,500 for people, with the DWP estimating the mass refund will total about £2.7billion.

A DWP spokesperson said: “The action we are taking now will correct the historical underpayments that have been made by successive Governments, and anyone impacted will be contacted by us to ensure they receive all they are owed.”

The payouts come following a campaign by former pensions minister Steve Webb, whose protest forced the DWP to agree to an investigation.

Mr Webb put in a Freedom of Information Request, which really revealed the full extent of the problem.

The former pensions minister said: “The scale of these underpayments is truly shocking.

“While it is good that the Government is now planning to address the issue, the plan to do so over five years is simply not fast enough.

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“It is also quite shocking that the DWP plans to stop paying interest on these underpayments, and if the Government is going to fix these problems it needs to do so swiftly and fairly.”

As it stands, it’s not clear exactly who is owed money as the problem lies between claimants and the DWP.

The Department has set up a special unit employing more than 100 civil servants to investigate the problem, and said it will contact those affected directly.

The ongoing clarification is expected to include cases where the underpaid claimant has since died.

But, several groups of women are advised to check their pension:

  • If you’re a married woman who hit State Pension age before April 2016 and your pension is less than 60 percent of your husband’s basic allowance
  • If you’re a widow whose pension wasn’t increased when your husband died, or who may have been underpaid while your husband was still alive
  • If you’re a woman aged 80 and over and get a State Pension of less than £80.45 a week – whether married, widowed, divorced or single
  • If you’re a divorced woman and should have benefited from your ex-husband’s NI record
  • If you’re the heir of a woman who was underpaid State Pension while alive and has since died

To check if you’ve been underpaid and are owed, contact the Pension Service and ask about your situation, you can call on 0800 731 0469.

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