Alastair Stewart sends warning about future of pensions
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The DWP is currently undertaking a state pension correction exercise as thousands of claimants are due to receive additional payments covering missed arrears. Mr Webb has written to the Permanent Secretary at the DWP, calling for an expansion of the effort to include divorced women as new problems come to light.
“The Department has dismissed concerns around this group far too lightly”
The state pension correction exercise came following the discovery of underpayments to divorcees of up to £60,000 in some cases. Divorced women are currently excluded from the exercise as the DWP believes there is no “significant evidence” of errors amongst this group.
Mr Webb is calling for a review of the decision to exclude divorced people. There are a number of reasons as to why a review is due, according to Mr Webb’s analysis.
There are 720,000 divorced women receiving the old (pre 2016) state pension, according to figures published in October 2021 by the DWP. The DWP notes 40,000 of these are not getting the standard rate for a married woman, which is currently £82.45 per week. In addition, a divorced woman can in some cases get up to a full basic pension (£137.60) using her ex husband's contributions, suggesting that “well over” 100,000 cases may be worth checking.
Mr Webb pointed out that just a one percent error rate would imply tens of millions of pounds in underpayments.
Mr Webb also argued the type of error that has caused problems for widows and others could equally be expected to arise in the case of divorced women. In the case of widows, the DWP accepts there are tens of thousands of cases where the Department was notified of the death of a spouse but no action was taken to reassess state pension entitlement. However, when women have reported a divorce, Mr Webb said the “DWP seems to believe that action has always been taken to reassess her state pension”.
The DWP have underpaid state pensions (Image: GETTY)
A number of case studies have also emerged which point to this being a prevalent issue, with some affected claimants having missed out on thousands.
This includes “Mrs M”, who was divorced when she reached pension age but never assessed on the basis of her ex husband's contributions. Mrs M was underpaid for 13 years and recently awarded a backpayment of over £36,000.
“Mrs H” was divorced when she retired and was repeatedly told that she had zero state pension entitlement. When she recently made a claim, the DWP accepted that she was entitled to over £140 per week and made a backpayment of over £60,000.
“Mrs C” notified DWP of her post retirement divorce in 2015 but no action was taken. As recently as 2021, the DWP wrote to her to tell her that her pension was correct; she has now had an increase in her pension of over £50 per week plus arrears of £16,000;
“Mrs H” divorced post retirement in 2010 and notified the DWP but no action was taken. She has received arrears of £20,000 plus a large pension increase.
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In his letter to the DWP, Mr Webb highlighted the Government initially dismissed complaints by widows, married women and others as isolated one-off cases, before eventually accepting a systematic problem.
Given the complexity of the state pension rules for divorcees, the former minister argued there is actually more potential for error in these cases, yet the DWP's position remains that there is no need to review the position of divorcees as part of its current exercise.
Mr Webb commented: “Given the large-scale errors on state pensions for widows, married women and the over 80s, it seems implausible that DWP has an unblemished record when it comes to the pensions of divorced women. A series of individual cases has highlighted blunders which have led to divorced women being underpaid by tens of thousands of pounds, in some cases for a decade or more.
“The Department has dismissed concerns around this group far too lightly and should take another look to assess the scale of the problem and then take action to put things right.”
State pensions can only be claimed from a certain age (Image: EXPRESS)
What's happened with state pension corrections thus far?
The DWP assured it would address state pension underpayments in recent months. In the past, it was possible to claim larger state pension payments based on a spouse or civil partner's National Insurance record, and the date the claimant and their partner reached state pension age.
This would typically be a figure equal to 60 percent of their spouse or civil partner's “basic state pension.” The people most likely to benefit from this are women born before April 1953.
Prior to March 2008, a claimant would have needed to manually make a claim for any extra amount owed but after March 2008, this should have been applied automatically.
However, it recently came to light that many people weren’t aware they needed to make a claim before March 2008 and, since then, the automatic process might not have happened correctly.
As the problem emerged, the DWP acknowledged some claimants may have been underpaid and it has started an exercise to put this right. The DWP stated: “Where underpayments are identified, the department will contact the individual to inform them of the changes to their state pension amount and of any arrears payment they will receive in accordance with the law.”
Even with this exercise however, the public advisory service Money Helper has warned some people will not be contacted automatically about any underpaid state pension.
Those affected could include divorced women who reached state pension age before April 2016, and married women whose husband turned 65 before 17 March 2008.
Where claimants may fall into these groups, they should contact the Pension Service for additional support.
This service can be called on 0800 731 0469. It can also be written to at the following address: The Pension Service, Post Handling Site A, Wolverhampton, WV98 1AF.
The Government also notes independent advice can be sought from Citizens Advice.
A DWP spokesperson said: "We encourage people to contact us if they get divorced or their civil partnership is dissolved and every year we remind people about doing so alongside the uprating notifications we send out.
“We want everyone to claim the benefits to which they may be entitled and we urge anyone of State Pension age – or their family and friends – to check if they are missing out on financial support.
“We apologise for the errors in the cases identified and have corrected our records and paid the arrears owed.”
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