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Thousands lose out in pension scandal caused by outdated IT

pension scandal

The NAO says the farrago only became clear to the DWP after individual pensioners and the media raised it

As many as 134,000 pensioners have each been cheated out of thousands of pounds in a £1 billion under-payment botch.

Most of those affected are women and it’s estimated that each missed out on £8900 thanks to outdated IT systems and “repeated human errors” made by the Department for Work and Pensions (DWP). However, it’s claimed that some were denied payments of as much as £100,000.

The public spending watchdog said part of that was almost inevitable due to the complex rules around entitlement. And in a report today, it says the figures may just be the tip of the iceberg as the Department’s estimates are highly uncertain and the true value of the underpayments will only become clear once it has completed its review of all affected cases.

The mess up, which concerns those who made their first claims before April 2016 and don’t have a full national insurance record, is the second pensions scandal to affect women after the Waspi row, which saw the state pension age pushed back by years for those born in the 1950s, many of whom had little or no notice of the change.

The National Audit Office (NAO) says the farrago only became clear to the DWP after individual pensioners and the media raised it, and it estimates that it will have to pay out £1.053bn in arrears.

Commenting, SNP Work and Pensions spokesperson David Linden MP said the trouble raises new questions about UK trustworthiness on pensions, despite long-standing claims that these are safer in the Union.

He said: It has only been two months since the parliamentary ombudsman published a damning report which found multiple instances of maladministration at the DWP over the mishandling of the change in state pension age for 1950s-born women and once again, exposed by this investigation by the National Audit Office, we see women disproportionately affected by the poor decisions and incompetence of Whitehall.

The NAO report reveals that DWP caseworkers often failed to set and later act on manual IT system prompts on pensioners’ files to review the payments at a later date, such as their spouse reaching state pension age or their 80th birthday.

When they did process prompts, staff often made mistakes because they found instructions hard to use and lacked the training to handle complex case, the NAO found.

On repayments, those who are widowed or over the age of 80 are now being prioritised.

However, the watchdog says the department has not approved a formal plan to trace the estates of those who have died before it could be rectified. Individual records are seldom kept for more than four years after death.

Gareth Davies, the head of the NAO, said: The impact of the underpayment of State Pension on those pensioners affected is significant. It is vital that the Department for Work & Pensions corrects past underpayments and implements changes to prevent similar problems in future.

A DWP spokesperson said: We are fully committed to ensuring the historical errors that have been made by successive governments are corrected, and as this report acknowledges, we’re dedicating significant resource to doing so. Anyone impacted will be contacted by us to ensure they receive all that they are owed.

Important:

This article is for information purposes only.

Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.

There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.