Unveiled: More State Pension Mistakes Discovered

Unveiled: More State Pension Mistakes Discovered - Could You Be Affected?

The Department for Work and Pensions (DWP) is currently working to rectify state pension errors for widows and widowers, with the correction exercise ongoing since 2021. Thousands of pensioners, including thousands of women and some fathers, have been identified as missing out on state pension payments due to inaccuracies in National Insurance records.

In four recent cases contacted by Steve Webb, a former pensions minister, retirees were not awarded any inherited state pension when they retired. However, it was later found that this was incorrect, and the amount of state pension has been increased, with arrears being paid. The late spouse in these cases reached pension age before 6th April 2016 and died before the same date.

The DWP has stated that delays can occur in a customer's state pension award when not all the required information is provided. In such cases, they will make a state pension award based on the customer's own National Insurance record until they have the necessary documentation.

The amount of inherited state pension someone is due can depend on personal circumstances, including whether the claimant comes under the old or new state pension system, the late spouse's death date, and whether the late spouse was a member of a 'contracted out' occupational pension scheme.

Steve Webb has warned that the DWP may have made mistakes when working out the amount of state pension for divorced people and for widowed retirees. The error could cost retirees £40,000 over a 20-year retirement. In an extreme case, someone who had wrongly not been given inherited additional state pension could inherit the maximum additional state pension, which is more than £200 per week.

People who are widowed before they turn 66 are being urged to check if they are not losing out on any state pension that they should inherit from their spouses. The group most affected are those who are widows or widowers at the point when they claim their new state pension, and where either the late spouse died before 6th April 2016 or was an employee (rather than self-employed). In these cases, the widow or widower can potentially inherit at least 50% of any "additional state pension" and 50% of any "Graduated Retirement Benefit" from the late spouse.

The DWP's correction of historic errors for widows and widowers will run until the end of this year. The government has been accused of making slow progress in reviewing these cases. More than £280 million has been paid in arrears to around 23,000 widows and widowers who had wrongly missed out on an inherited state pension.

LCP has created a new state pension tool to help widows and widowers check their state pension and understand what money they are entitled to inherit on top of their own state pension. The government also has a tool to assess someone's eligibility for inherited state pension amounts, and more information can be found on the GOV.UK website.

According to the DWP's annual report, a total of £970 million in arrears is due to 133,000 pensioners. The pensioners potentially affected by erroneous payments of the collection claim on inheritance state pensions are those who legally inherit state pensions through inheritance and may have experienced delays or non-receipt due to these payment errors; specific affected groups include heirs or representatives of statutory heirs involved in inheritance claims linked to state pension benefits.

It is crucial for widows and widowers to check their state pension entitlements to ensure they are receiving the correct amount. For more information, visit the GOV.UK website or use the LCP state pension tool.