MPs have sent a letter to the Department for Work and Pensions (DWP) asking for proper checks to be done on potential state pension errors among divorced women and men.
Sir Steve Webb, partner at consultants LCP and a former pensions minister, said that given the “massive” state pension underpayments for married women, widows and the over-80s, it was “stretching belief to think that divorced people’s pensions have all been worked out perfectly”.
Webb had previously submitted evidence to the DWP showing a surprising number of divorced women on low state pensions.
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He explained that the department initially dismissed the issue, but the Work and Pensions Select Committee has now asked them to have another look, “not least given all the other state pension errors which have been found in recent years”.
Last night, the select committee published a letter they had sent to the top civil servant at the DWP.
Committee chair Sir Stephen Timms wrote: “I would be grateful if you would review the decision to exclude divorced people from the exercise [of reviewing pensioner cases at risk of having been underpaid] given the progress you have now made in correcting underpayments to two groups (married women and over-80s)”.
The letter highlighted Webb’s evidence in which he found that although a divorced woman could be entitled to a full basic state pension (£169.50 a week in 2024/25), some 40,000 women were receiving less than 60% of that amount, suggesting “there could be many divorced women losing out”.
Timms wrote that Webb had identified several individual cases of divorced women who were being paid the wrong amount (or no pension at all) and in each case, the DWP had accepted that money was due and had paid substantial arrears.
Timms continued: “It has since come to my attention that some divorced men are also affected. For example, a man divorced might be entitled to less than the full amount of the basic state pension based on his own contributions, but to the full amount once the contributions of his former spouse are taken into account.”
The DWP has been given until 1 May to reply.
Webb urged the DWP to do a “thorough search for potential errors”, and warned that state pension underpayments to divorcees could be “substantial”.
Tom Selby, director of public policy at the investment platform AJ Bell, added: “The DWP definitely needs to investigate as a matter of urgency. There have already been significant cases of administrative failure in the payment of state pensions historically uncovered, which have resulted in billions of pounds of compensation being paid out to tens of thousands of people.
“If there have been errors in relation to divorcees, these need to be uncovered as soon as possible so anyone who has lost out receives the money they are owed.”
Why might divorced people be underpaid their state pensions?
Under the old state pension system (for those who reached pension age before 2016) there were two main ways in which a divorced woman could benefit from her ex-husband’s contributions:
a) Where a woman divorced and did not remarry before pension age, her state pension at retirement could take account of her ex-husband’s contributions up to the date of their divorce; where his NI record was better than hers, she could “substitute” his record for that period; provided that the woman gave full details of her ex-husband at retirement this calculation should be done automatically;
b) Where a woman divorced after retirement, and notified the DWP, the DWP should then reassess her state pension, taking account of her ex-husband’s contributions right up to her retirement. In many cases this would entitle her to a full basic state pension.
According to Webb, it is the second group where there is the most potential for underpayments. “The current mass correction exercise relates to errors where something changed post retirement (for example, a woman’s husband retired or died, or she turned 80) and the DWP failed to do a reassessment, so it would not be a total surprise if the same had happened in some divorce cases.”
Webb added: “For any given individual the difference could be very substantial, especially where a woman had a poor National Insurance record but her ex-husband had a full record.”
For men, since 1979 they have been able to substitute the contributions of an ex-wife when being assessed for the state pension. Webb explained that as most men get a full basic pension in their own right this has not been that relevant, but there could be individual cases where a man needed to use his ex-wife’s contributions and this was not done correctly.
So, some divorced men may also potentially lose out from failures in the state pension system.
How to check if you’re getting the right state pension
Thousands of women are being contacted by the government about state pension errors.
Divorced people are currently out of the scope of the DWP’s correction scheme.
If you’re worried you may not be receiving the correct amount of state pension, contact the Pension Service on 0800 731 0469.
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