Government admits it has got its state pension sums wrong

published 14 June 2019

Approximately 360,000 people have been given incorrect forecasts of their state pension benefits, the government has confirmed.

Some 3% of all online forecasts issued to savers since 2016 are incorrect, the Department for Work and Pensions (DWP) says, often overstating what people are entitled to by £1,000 a year.

The announcement follows warnings from pension specialists that the DWP's electronic records of many people's work histories are patchy.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

In particular, they may miss out periods when people had opted out of the state earnings-related pension scheme in the 1980s and 1990s, during which time they weren't building up state pension entitlement at the normal rate.

The DWP now says an investigation into its forecasting shows that up to 3% of the online statements requested by people checking their state pensions have been affected by these omissions.

Its paper-based forecasts, issued to those who write in to formally request a benefits statement rather than using the automated online system, are thought to be much more accurate.

The upshot is that anyone who has received a forecast in the past three years should now double-check their position, particularly if they have opted out of the state system at any time in the past.

David Prosser is a regular MoneyWeek columnist, writing on small business and entrepreneurship, as well as pensions and other forms of tax-efficient savings and investments. David has been a financial journalist for almost 30 years, specialising initially in personal finance, and then in broader business coverage. He has worked for national newspaper groups including The Financial Times, The Guardian and Observer, Express Newspapers and, most recently, The Independent, where he served for more than three years as business editor.