DWP update as 194,000 Brits owed £5,000 payout for state pension mistake

The Department for Work and Pensions (DWP) has announced a significant update regarding state pension underpayments, affecting thousands of people.

Newly released figures show that only 400 out of a potential 194,000 individuals have received payouts so far, with an average amount of around £5,000 owed per person.

The issue, which emerged last year, primarily impacts parents—mostly stay-at-home mothers—who claimed Child Benefit but did not have their National Insurance records properly updated with Home Responsibilities Protection (HRP). HRP reduces the number of qualifying years needed to claim the state pension for those not working and paying National Insurance.

This problem originated from National Insurance numbers not being consistently recorded when people claimed Child Benefit before 2000, resulting in missing HRP periods between April 6, 1978, and April 5, 2000. Last autumn, HMRC and the DWP committed to identifying those affected over the next 18 months.

However, the recent data indicates that progress has been slow, with only £2.2 million paid out by the end of March 2024, compared to an estimated £1.15 billion owed. The repayment process might extend until 2027/28, meaning those affected could wait even longer for their money.

Steve Webb, a partner at LCP and former pensions minister, criticized the pace of the repayments, stating that the issue is not being treated with the urgency it deserves.

"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", he told the Mirror.

"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”.

The DWP has prioritized issuing letters to those closest to state pension age, but the delay has resulted in some eligible individuals passing away.

Out of the estimated 194,000 people affected, around 151,000 are still alive, and the families of those who have died can claim the underpayments.

Individuals who believe they were affected can check their eligibility online using the self-identification tool on GOV.UK. The process takes around five minutes and involves four sections.

The government advises checking National Insurance records for gaps and knowing if HRP is already recorded.

"The action we are taking now will correct historical underpayments made by successive governments", A DWP spokesperson previously stated. "We are fully committed to addressing these errors, not identified under previous governments, as quickly as possible. We have set up a dedicated team and devoted significant resources towards completing this, with further resources being allocated throughout 2023 to ensure pensioners receive the support to which they’re entitled."