More than £800 million in state pension underpayments has been identified as part of a government correction exercise, which has been underway since January 2021. The Department for Work and Pensions (DWP) published an update on Thursday, revealing that the ongoing exercise, aimed at addressing errors in pension payments, has uncovered a significant number of underpaid individuals.
Between January 11, 2021, and March 31, 2025, the checking process identified 130,948 cases of underpayment, with a total of £804.7 million owed to pensioners. This includes cases where married women with low state pensions were not receiving the correct amounts, as well as individuals whose pensions were not automatically reassessed following the death of a spouse. Additionally, over-80s have been found to have missed out on automatic increases to their state pension entitlements.
While the exercise has been focused on identifying underpaid pensioners, it has also highlighted some instances where people may have received overpayments through other benefits, such as pension credit. There have also been situations where individuals have passed away, and the DWP has been unable to locate their estates to pay the owed arrears.
The issues mainly affect women, particularly married women on low state pensions, who have faced underpayment due to their pensions not being automatically uplifted when their husbands retired. Furthermore, cases have been identified where pension payments were not correctly adjusted after the death of a spouse, leaving many pensioners receiving less than they were entitled to.
The DWP’s update also mentions that individuals who have been affected by multiple causes of underpayment may have their cases checked for each potential error. As a result, some claims may be counted in more than one category.
Another correction exercise, aimed at addressing missing periods of Home Responsibilities Protection (HRP), has also been underway. HRP was a system designed to protect individuals who took time off work to care for children or other dependents, ensuring they still received state pension credits for those periods. The exercise, running between January 8 and September 30, 2024, has so far identified 5,344 underpayment cases, with arrears totaling around £42 million.
Sir Steve Webb, former Liberal Democrat pensions minister, who has been instrumental in uncovering state pension errors, warned that the amounts paid out under the HRP exercise are expected to increase significantly as it gathers momentum. A previous HRP correction exercise carried out over a decade ago resulted in state pension arrears payments of £83 million.
Sir Steve, who is now a partner at consulting firm LCP (Lane Clark & Peacock), remarked: “The vast majority of those who lost out were women, some of whom were underpaid for decades or even passed away without receiving the correct state pension. The remaining corrections must be handled with urgency. This should never happen again.”
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Rachel Vahey, head of public policy at investment platform AJ Bell, described the underpayment scandal as one of the largest benefit issues of recent times. She emphasised that the DWP’s miscalculations have caused significant financial hardship for thousands of pensioners, particularly women, who have been left short on their state pension payments. Vahey stressed that it is crucial for the affected pensioners to receive the money they are owed as quickly and efficiently as possible.
A spokesperson for the DWP stated: “Our priority is ensuring pensioners receive the dignity and security they deserve in retirement, and that state pension underpayment rates remain as low as possible. We have now completed the vast majority of cases in the exercise as planned, with a small number of outstanding cases due to further documentation needed from the customer.”
The identification of more than £800 million in underpaid state pensions highlights ongoing challenges within the system and the need for swift corrective action. As the DWP continues its efforts to rectify these errors, the financial security of thousands of pensioners, many of whom have been affected for years, remains at the forefront of the correction drive. With additional HRP cases still being investigated, it is hoped that more pensioners will soon receive the payments they are entitled to, putting an end to a long-running and distressing issue for many families across the UK.
