State pension errors facing widows and widowers

A newly discovered group of people reported to be receiving less state pension than they are entitled to illustrates the importance of checking you are getting the correct amount.

Reaching state pension age is an exciting moment for many people. Claiming your state pension is easy, via a simple online or telephone application, and the Department for Work & Pensions (DWP) then sends you a letter to confirm exactly what you’ll get. Except, it might not always be correct.

Various reviews by DWP have been taking place since 2021 to correct mistaken underpayments of the state pension which have occurred over a number of years, primarily to female divorcees and widows.

In 2022 it was estimated that 237,000 state pensioners, mostly women, were paid less than their state pension entitlement. The problem links to the old state pension system which allowed married women with a small pension of their own to claim a 60% basic state pension based on their husband's record of contributions. But an error at DWP meant they were not automatically given this money.

DWP is in the midst of a correction exercise to resolve historic pension errors. As of 31 March 2024, over £280 million had been paid in arrears to approximately 23,000 widows and widowers, and DWP estimates a total of £650 million will have been paid to more than 50,000 widows and widowers who wrongly missed out on inherited state pension by the end of 2024.

New segment of underpaid pensioners

Now, former pensions minister Steve Webb has raised the alarm that another segment of people, mostly women whose husband or civil partner passed away, are not being paid the state pension which is due to them.

If you are widowed and don’t, or won’t, receive the full basic state pension based on your own National Insurance contribution record, and your deceased spouse or civil partner reached state pension age before 6 April 2016, you may be entitled to inherit some of their state pension.

If you are eligible, DWP should apply this additional state pension to your payments automatically, however it appears this has not been the case for some people. Please note, if you remarry or enter a new civil partnership before you reach state pension age you lose the right to inherit any State Pension from your former spouse or civil partner who passed away.

Tip of the iceberg

Webb, who was pensions minister between 2010 and 2015 and is now a partner at consultancy firm LCP, has called on DWP to launch an “urgent investigation” into the scale of the problem.

“Having had to spend years checking hundreds of thousands of historic state pension calculations for errors, you would hope that DWP would be making sure that new claims are handled correctly. But we have found worrying evidence that this is not the case,” Webb said.

“There seems to be a particular problem for people who are widows or widowers when they claim their state pension. In some cases DWP seems to have failed to automatically add any inherited state pension they were due from a late partner. These cases may well be the tip of an iceberg, with many thousands of people potentially underpaid.”

Don't assume it's right

Many people assume that the benefits they are receiving from the state, pension or otherwise, must be the correct amount. But mistakes can and do occur, which is why it’s always worth checking that you are receiving everything that you are entitled to.

“Rules around pension entitlements can be complicated,” says Steve​​​​ Baker, Chartered Financial Planner at Ascot Lloyd. “The government brought in a new state pension system on 6 April 2016 because the previous system was seen as overly complicated, but that complexity still lives on to the extent that even DWP continues to make errors.

“If your partner reached state pension age before 6 April 2016 and has subsequently passed away then your state pension should have automatically increased to at least what your partner was being paid.

“For example, Mrs A, a client of mine, was sadly widowed in December 2023. From January 2024 her state pension immediately increased from the £465 every four weeks she was receiving to £1,315 which was her husband’s state pension.

“If your circumstances are similar but your state pension didn’t increase after your partner died you should speak to your financial adviser, or contact the Pension Service yourself, to check if you are entitled to the increased payments.” LCP’s website has a series of questions which you can complete to help you see if you might be affected – it can be found here .

If you would like to speak with someone about pensions and retirement planning call your adviser directly or, book a call back with our client services team.