By The Department for Work and Pensions (DWP) revealed on Wednesday that around 200,000 retired women could get a payout of £13,500 for underpaid pensions for up to 20 years.
The DWP estimated that the shortfalls add up to about £2.7bn in total.
Women who reached pension age before 6 April 2016 are affected.
The underpaid pensions relate to the former state pension system, which had special provisions for married women. Under the old rules, married women who had a poor pension could claim a 60 percent basic state pension which was based on their husband’s record of contributions.
The pensions were then supposed to be automatically increased at some point, but some women’s were not.
These women are among those who should receive the payout, along with widows and over-80s with “enhanced” pensions.
You could be underpaid if you are:
- A married woman over state pension age, who reached pension age before 6 April 2016 and
- Your husband is over state pension age and
- Your husband has a full basic state pension, currently £129.20 a week, in his own right and
- You are getting a weekly basic state pension of less than £77.45 per week.
The scale of the underpayments came to light in the details of a report by fiscal watchdog the Office of Budget Responsibility (OBR) report which was published alongside the Budget.
It said: “The underpayment affected married women whose husbands reached pensionable age before 2008 and who were unknowingly entitled to ‘enhanced pension’ that would have boosted their payments by up to 60%.
“Our forecast reflects an initial estimate that it will cost around £3billion over the six years to 2025-26 to address these underpayments, with costs peaking at £0.7billion in 2021-22.”
A review is now set to take place, assessing hundreds of thousands of cases, including those where the underpaid retiree has since passed away. This could take many months to complete.
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