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UK’s state pension system not fit for purpose, cites report

state pension

In September last year it emerged that the DWP was estimating it had underpaid 134,000 pensioners a total of more than £1bn of state pension cash that they were entitled to

The UK’s state pension payment system is not fit for purpose, resulting in the ‘shameful shambles’ of an underpayment scandal that left tens of thousands of pensioners short-changed, according to a scathing report from a committee of MPs.

The public accounts committee (PAC) also lambasted the Department for Work and Pensions (DWP) for its ‘complacency’, and accused it of not having been ‘sufficiently transparent’ to parliament about the problems.

In September last year it emerged that the DWP was estimating it had underpaid 134,000 pensioners, mostly women, a total of more than £1bn of state pension cash that they were entitled to.

At the time, the National Audit Office (NAO) said this long-term underpayment of state pensioners was the result of repeated errors that were almost inevitable amid complex rules and outdated IT systems.

It emerged that those affected that the DWP could trace would be paid an average of £8,900 each.

The state pension is paid to nearly 12.4 million people, and these errors affect pensioners who first claimed it before April 2016 and who do not have a full national insurance record or should have inherited additional entitlement from their deceased partner.

Of the 134,000 people hit by these problems, it is thought that 94,000 are alive – about 0.9% of those currently claiming the pre-2016 basic state pension. Where those affected have died, the department owes the pensioners’ estates.

The PAC decided to investigate the issue, and said the underpayments uncovered ranged between one pence and £128,000.

Dame Meg Hillier, the Labour chair of the committee, said that for decades the DWP had relied on a state pension payment system that was ‘clunky’ and required staff to check many databases, ‘and now some pensioners and the taxpayer are paying in spades’.

She added: This is a shameful shambles. The PAC expects the DWP to set out the step changes it will make to ensure it is among their last.

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.