Have you been underpaid your State Pension?

Underpaid State Pension

It’s thought that 237,000 women are likely to have been underpaid their state pension at an estimated average of £8,900. The Department for Work and Pensions (DWP) is currently reviewing pension records to find all those affected. We look at why this has happened and whether you or a family member might be eligible to make a claim.

Many married, divorced, and widowed women, who reached state pension age before April 2016, should have been entitled to certain automatic uplifts. However, due to an IT glitch, the automated assessment process did not trigger for some groups of women. The computer errors are the result of heavy manual processing of pensions and outdated IT systems. The total cost of pension underpaid state pensions is around £1.5bn.

The problem relates to the old state pension system. Where married women received 60% basic state pension based on their husband’s contributions. However, a new state pension system came into force after this time. So, if you’re female and started claiming your pension from April 2016, the following points won’t apply.

Should I check my state pension payments?

Certain scenarios have been affected by the Government’s state pension glitch. If you’re a woman who reached state pension age; before April 2016, and you fall into one of these groups, you’ll probably need to make a claim.

  • If you’re a married woman on zero state pension, you might be receiving a small extra pension in the form of a graduated retirement benefit (GRB) or SERPS
  • If you’re a woman who divorced after you retired and you haven’t had your pension reassessed
  • If you’re a woman whose husband turned 65 before 17 March 2008 and paid less than 60% of your husband’s state pension

The following groups of people should receive automatic top-ups from the Government, but it’s worth double-checking to be sure:

  • If you or a family member is 80 years or over, and you’re not receiving a minimum of £85 per week for your state pension
  • If you’re a widow whose state pension didn’t increase when your husband died, OR 
  • If your husband died after April 2008, you were paid less than 60% of his state pension when he was alive
  • If you’re a woman whose husband turned 65 after 17 March 2008 and paid less than 60% of your husband’s state pension

If you’ve not received the automatic uplifts and the DWP has not contacted you, it’s worth checking to see if you can reclaim payments.

What could I be owed for an underpaid state pension?

You’ll need to look at the rate of the married women’s pension to work out the payment you might be able to claim. The full basic state pension was £137.60 per week for 2021-22. If you are a married woman claiming 60% of your husband’s state pension, this is £82.45 per week. You’ll need to bear in mind the rate goes up every April and was lower in previous years.

From 2008/09 to 2020/21, 52 weeks of the married woman’s pension = £45,604. Before 2008, payments could have been larger if your husband had reached the state pension age. But if your husband deferred his state pension, your pay-out will only be backdated to when he started drawing pension income.

How you can make a claim?

To check if you’re eligible to make a claim, you could speak to our financial planning team or call the Pension Service on 0800 731 0469. They will ask you for the following details:

  • Your name, date of birth, and NI number
  • Your current annual basic state pension (found on a recent annual statement) or you can provide the total weekly or monthly amount
  • Your husband’s name, date of birth (and date of death, if applicable), along with his NI number
  • Your husband’s basic state pension – the current figure or the last known amount before he died

Planning your pension income

Keep an eye on your pension income and check this regularly with a professional financial planner. We’ll ensure you receive all the right entitlements and benefits. If you’re unsure, don’t wait for your annual pension statement. We offer pension reviews and financial forecasts, so you can plan ahead and make the most of your pension income.

If you’re worried that you have paid too much pension tax, please read our previous blog Have you paid too much tax on your pension?

Do you need to check your pension? Our independent financial planning team can provide reviews and advice on most pension schemes; please get in touch.