Wealth of Advice, Swale House, Mandale Business Park, Durham, DH1 1TH
The Department for Work and Pensions (DWP) has said that it expects to complete its state pension underpayment correction exercise by the end of 2024, although work to address Home Responsibilities Protection (HRP) errors is set to continue until 2027/28.
The DWP confirmed that the state pension legal entitlement and administrative practice (LEAP) exercise has now completed two of the three customer groups: the Cat BL (married) and Cat D (over 80s) cases.
The problems affected married women whose husbands reached pensionable age before 2008, as well as widows and those over 80 who were unknowingly entitled to an 'enhanced pension' that would have boosted their payments by up to 60 per cent.
According to the update, £245.5m has been repaid to the 43,825 cases involving married women, with an average arrears amount of £5,693, while a total of £281.7m has been repaid to the 22,964 widowed cases, with an average £12,423 payment.
In addition to this, the DWP paid £66.6m in relation to the 32,769 cases involving those over 80, with an average arrears payment of £2,196.
The remaining cases are those where DWP is awaiting further information from a customer or a third party, and DWP confirmed that the expectation is for the exercise to be completed for the third group, missed conversions, by the end of 2024.
However, the DWP is still working with HM Revenue and Customs on the HRP correction exercise, with the annual report confirming that the exercise is still in its early stage.
Industry experts have raised concerns about the pace of progress, with consultancy LCP noting that, by the end of March 2024, DWP had assessed 419 cases, with £2.2m in arrears so far been paid out compared with an estimated final bill of £1.15bn.
LCP partner Steve Webb said: “Once the government realised that nearly 200,000 mothers may have been underpaid their state pension, action should have been taken to fix the problem with much greater urgency, especially as many of those who have lost out are now elderly.
"Instead, DWP has so far assessed fewer than 500 cases out of that total, and the exercise is proceeding at a snail’s pace. When the government talks about continuing the exercise into 2027/28, it is clear that this issue is not getting the priority that it deserves.”
If you want a better view of what your future could be, we'll have a chat over a cup of coffee in our Durham office and work out if we can add any value to your financial picture.
Wealth of Advice are authorised and regulated by the Financial Conduct Authority, reference number 563909. This website is for information purposes only and is not personal advice.
We are committed to providing products and service of the very highest standards. If you feel that we haven't lived up to your expectations in any way, however, we would like to know so we can put things right for you. If you have a complaint, make sure you contact us directly. Accordingly, we will do all we can to resolve your complaint by the end of the next business day. However, if we can't do this, we will write to you within five working days to tell you what we have done to resolve the problem, or acknowledge your complaint and let you know when you can expect a full response. Furthermore, if we haven't issued our response within eight weeks from the date you first raised your complaint, or if you're dissatisfied with our response, you can ask the Financial Ombudsman Service - www.financial-ombudsman.org.uk - for an independent review. The Financial Ombudsman Service will only consider your complaint once you've tried to resolve it with us, so please take up your concerns with us first and we'll do all we can to help.
Wealth of Advice Ltd is a company registered in England and Wales, company number 07709624.
VAT Number: GB131946515