Pension underpayment? Are you due a payout? Laura Richardson’s latest article considers how you can determine if you may have had a pension underpayment that you need to be aware of . . .

Earlier this year, the Department for Work and Pensions (DWP) released the shocking information that they have underpaid around 200,000 pensions in the UK! These pensioners could now be eligible for an average payout of £13,500, costing the DWP £2.7 billion!

Following an investigation between August 2020 and January 2021 involving millions of state pension records, the DWP has revealed that those affected are only those that reached pension age before 6th April 2016. Up until this time, married women qualified for special provisions, under which they could claim a 60% basic state pension based on their husband’s record of contributions. However, many pensioners were not automatically granted this increase and have therefore received far less than what they are entitled to and could argue that they had had a pension underpayment accordingly.

In a written statement to Parliament on March 4th 2021, the DWP stated that the affected people fall into one of the following groups:

  • “People who are married or in a civil partnership who reached State Pension age before 6 April 2016 and may be entitled to a Category BL uplift based on their partner’s National Insurance contributions.
  • Following a change in the law in 2008, when their spouse became entitled to a State Pension, some people should have had their basic State Pension automatically reviewed and uplifted. Underpayments occurred in cases when this did not happen.
  • People who have been widowed and their State Pension was not uplifted to include amounts they are entitled to inherit from their late husband, wife or civil partner.
  • People who have not been paid Category D State Pension uplift as they should have been from age 80.”

The statement reported that the underpayments occurred due to DWP staff not taking action to review the pension accounts in question, despite system alerts prompting staff to manually action the increases due. If you fall into one of the above groups you may be entitled to a payout of thousands of pounds, however not all of the payouts will be done automatically. Therefore, you may be required to make a claim for a pension underpayment. Further information on how to claim can be found at https://www.gov.uk/contact-pension-service.

If you would like to discuss your pension in further detail Andrew Douglas Wills & Legal Services are proud to partner with an experienced financial firm to offer expert advice on all aspects of pensions and retirement investments. Not yet receiving your pension? We also offer a complimentary pre-retirement readiness assessment! Whether you are retired, nearing retirement, or just embarking on working life, contact Andrew Douglas Wills & Legal Services today!

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