What began with the government insisting that cases of women being underpaid state pensions were isolated and uncommon has turned into an official inquiry that could see the Department for Work and Pensions (DWP) pay out £2.7bn in compensation. The DWP said last week that 200,000 women may not be receiving as much state pension as they are entitled to. It estimates that the average woman is owed a top-up of £13,500.
The shortfall, initially uncovered by researchers at the insurer Royal London, stems from poor record keeping at the DWP over several decades. It failed to keep track of women who should have received enhanced pensions under the old state-pension system, which topped up the income paid to married women on smaller pensions through complicated links to their husbands’ entitlements. In some cases, women who have been receiving a state pension of only a few pounds each week have discovered, late in their retirement, that they are owed thousands, or even tens of thousands, of pounds. But many others have no idea they have missed out – and until earlier this year, the DWP had refused to launch a full-scale investigation.
Broadly speaking, the issue applies to women who are married or in a civil partnership and reached state-pension benefits before April 2016. They may be entitled to extra state pension based on their partners’ national insurance contributions. People who have been widowed or divorced may also be in line for additional payments.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
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
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The DWP said last week that it now has 100 civil servants working on the inquiry. But it will take some time to complete: there are several hundred thousand cases still to get through.
A landmark ruling on age discrimination
Members of public-sector pension schemes affected by a landmark court ruling on age discrimination will be given an improved deal to ensure they can maximise their pension benefits, the government has announced.
This issue dates from reforms to public-sector pension schemes implemented by the government in 2015. As part of the changes, scheme members within a decade of retirement were allowed to remain in the existing, unreformed schemes, but younger members were moved into new schemes offering less generous benefits.
In 2018 the courts ruled that the reforms were illegal because they discriminated against younger scheme members. In response, the government has announced a new deal, which will use a device known as a “deferred choice underpin”. Members affected by the ruling will now have a choice when they reach retirement, with the option of receiving benefits calculated in line with the reforms, or as if the changes had never taken place.
Importantly, savers will be able to make a decision on an informed basis, according to the value of the two options when they retire, rather than having to make assumptions about the future today. Not everyone will be better off by simply keeping hold of their old benefits, so this is potentially valuable.
-
How much should I have in emergency savings?When your boiler breaks or your car won’t start, you can find yourself paying a hefty bill. How much should you have in emergency savings to cover unexpected costs?
-
ISA investments by age: should I invest more in my stocks and shares ISA?Stocks and shares ISAs are a great way to grow long-term wealth, but are they overlooked compared to cash savings? We look the average ISA investment by age and if you should have more.
-
What is the state pension triple lock?Explainer The UK state pension triple lock is loved by pensioners but hated by economists. But what is the triple lock - and what does its future hold?
-
How much state pension will I get?Advice There are several things that determine how much state pension you'll get when you hit retirement age. Here's how to work out your entitlement
-
£500 million state pension underpayments identified - are you owed money?News The DWP has so far identified £500m in state pension underpayments between January 2021 to October 2023. We explain how to check if you’ve been affected and how to claim your money back.
-
State pension age could rise to 68 by 2040, says work and pension secretaryNews Decision on increasing the state pension age past 67 is delayed and will not be made by the current government
-
State pension top-up deadline extended again to April 2025Pensions Spending just over £907 to purchase NI credits could add £7,740 a year to your pension pot – and now the government has extended the deadline to buy back missing credits.
-
State pension age could rise to 68 as early as 2035 – what it means for youNews State pension age increases could be accelerated, with the change to 68 coming in as early as 2035, affecting those who are 54 and under today.
-
State pension errors: HMRC contacts thousands of women over missing paymentsNews HMRC has sent out 325,000 letters so far. The average underpayment is £5,400 - could you be affected?
-
Triple lock to stay: how will it affect your pension?Analysis Triple lock looks set to stay, but what it is and what does it mean for your retirement income?
