Underpayments of the State Pension

Public Accounts Committee Closed Inquiry
Opened: 21 Sep 2021 Closed: 7 Apr 2022 Parliament page
In early 2020 the Department for Work & Pensions (DWP) became aware of underpayments of State Pension affecting certain women who reached State Pension Age before 2016 . Subsequent DWP investigations uncovered systematic issues meaning that tens of thousands of people might have been underpaid State Pension for many years. … Read more
1 Recommendation
21 Conclusions
1 Report
1 Oral session
3 Letters
1 Event
Activity timeline 7 events
28 Apr
2022
Report published
25 Apr
2022
Correspondence
21 Jan
2022
Report published
14 Dec
2021
Correspondence
23 Nov
2021
Correspondence
28 Oct
2021
Oral evidence
28 Oct
2021
Formal meeting (oral evidence session) · The Grimond Room, Portcullis House
Oral evidence sessions 1 session
28 Oct 2021
View on parliament.uk
Underpayments of the State Pension
Amanda Reynolds · Department for Work & Pensions Cathy Payne · Department for Work & Pensions Peter Schofield · Department for Work and Pensions
Title HC No. Published Items Response
Thirty-Third Report - Underpayments of the State Pension HC 654 21 Jan 2022 22 Responded
Recommendations & Conclusions
22 results
2 Conclusion
Thirty-Third Report - Underpayment…
The Department’s complacency about the level of underpayments inherent in its approach to administering State...
The Department’s complacency about the level of underpayments inherent in its approach to administering State Pension has led it to fail pensioners. The Department’s highly manual systems and complex State Pension rules has led to calculation errors and the underpayment … Read more
Government Response
2025. This should be broken down by how much coverage is being achieved by: • individual commercial suppliers, such as Openreach, Virgin Media O2 and smaller suppliers know as alternative … Read more
HM Treasury
View details
3 Conclusion
Thirty-Third Report - Underpayment…
The Department has not given people who are worried they have been underpaid enough information...
The Department has not given people who are worried they have been underpaid enough information to find out what they should do, with the risk that many may still miss out on money they should receive. The Department’s communications strategy … Read more
Government Response
3.1 The government agrees with the Committee’s recommendation. Recommendation implemented 3.2 The department welcomes the endorsement of action already taken with their proposed recommendation, although rejects the Committee’s conclusion. As … Read more
HM Treasury
View details
4 Conclusion
Thirty-Third Report - Underpayment…
Correcting the State Pension underpayments comes at a great cost to the taxpayer and requires...
Correcting the State Pension underpayments comes at a great cost to the taxpayer and requires experienced specialist staff that are in short supply. The correction exercise requires specialist staff and training and is expected to cost the Department £23.4 million, … Read more
Government Response
4.1 The government agrees with the Committee’s recommendation. Recommendation implemented 4.2 The department continually reviews and manages demand across the business, balancing the need to deliver existing services with any … Read more
HM Treasury
View details
5 Conclusion
Thirty-Third Report - Underpayment…
The Department has not been sufficiently transparent to Parliament about the State Pension underpayments.
The Department has not been sufficiently transparent to Parliament about the State Pension underpayments. Until recently, the Department has been reluctant to provide details of the volume or value of State Pension underpayments or the backlog in processing new State … Read more
Government Response
5.1 The government agrees with the Committee’s recommendation. Recommendation implemented 5.2 The department agrees with the recommendation, but disagrees with the overall conclusion, given it has already committed to providing … Read more
HM Treasury
View details
6 Recommendation
Thirty-Third Report - Underpayment…
In paying pensioners, a lump sum of their arrears, the Department may not be fully...
In paying pensioners, a lump sum of their arrears, the Department may not be fully restoring them to the position that they would be in had the Department paid them correctly in the first place. The payment of a lump … Read more
HM Treasury
View details
7 Conclusion
Thirty-Third Report - Underpayment…
Given the nature of the underpayments identified there must be a risk that similar, unidentified...
Given the nature of the underpayments identified there must be a risk that similar, unidentified errors exist elsewhere in the State Pension caseload. For example, the NAO report states that “the Department did not find any significant evidence that it … Read more
Government Response
2021. Greensill Capital marketed its salary advance scheme, Earnd, to NHS trusts from 2019 and charged no fee to employers and employees for using the service Based on a report … Read more
HM Treasury
View details
1 Conclusion
Thirty-Third Report - Underpayment…
On the basis of a report by the Comptroller and Auditor General, we took evidence...
On the basis of a report by the Comptroller and Auditor General, we took evidence from the Department for Work & Pensions on the issue of underpayments in State Pension1
Government Response
Based on a report by the National Audit Office, the Committee took evidence on Thursday 28 October 2021 from the Department for Work & Pensions. The Committee published its report … Read more
HM Treasury
View details
8 Conclusion
Thirty-Third Report - Underpayment…
In addition, the customer information contained in the legacy system is difficult to obtain, taking...
In addition, the customer information contained in the legacy system is difficult to obtain, taking several weeks to scan, and demographic data—such as income distribution or ethnic background—are not available.15 The Department told us that, while it was not 7 … Read more
Government Response
1.2 As outlined at the Committee hearing on 28 October 2021 (questions 39; 46; 64), the Department for Work and Pensions (the department) has made significant progress to transform customer … Read more
HM Treasury
View details
9 Conclusion
Thirty-Third Report - Underpayment…
We challenged the Department on the adequacy of its quality assurance mechanisms.18 Despite the complexity...
We challenged the Department on the adequacy of its quality assurance mechanisms.18 Despite the complexity of State Pension entitlements and the increased risk posed by manual processes of calculating an award, the Department’s own internal analysis found that existing quality … Read more
Government Response
2.3 The department has strengthened its assurance methodologies, to ensure that associated sampling is more robust and picks up the widest range of errors possible for correction, using insight to … Read more
HM Treasury
View details
10 Conclusion
Thirty-Third Report - Underpayment…
The Department told us it changed its quality assurance framework over the LEAP exercise and...
The Department told us it changed its quality assurance framework over the LEAP exercise and business-as-usual State Pension processing.21 Following our evidence session the Department explained that, as part of its quality strategy review it reviewed its training products, amended … Read more
Government Response
2.2 The department rejects the Committee’s assertion. The department has been taking action to prevent future errors since Summer 2021. As outlined at the Committee hearing on 28 October 2021 … Read more
HM Treasury
View details
11 Conclusion
Thirty-Third Report - Underpayment…
When we asked the Department what positive assurance it obtained that the system was working...
When we asked the Department what positive assurance it obtained that the system was working and that it was paying people on time and the right amount, it set out the three quality assurance tiers and that said that its … Read more
Government Response
2.3 The department has strengthened its assurance methodologies, to ensure that associated sampling is more robust and picks up the widest range of errors possible for correction, using insight to … Read more
HM Treasury
View details
12 Conclusion
Thirty-Third Report - Underpayment…
A Legal Entitlements and Administrative Practices (LEAP) exercise is a systematic review of cases at...
A Legal Entitlements and Administrative Practices (LEAP) exercise is a systematic review of cases at risk of being underpaid to help the Department ensure it has met its legal responsibilities. The Department for Work & Pensions (the Department) uses LEAP … Read more
HM Treasury
View details
13 Conclusion
Thirty-Third Report - Underpayment…
The Department began a LEAP exercise for State Pension underpayments in January 2021, which was...
The Department began a LEAP exercise for State Pension underpayments in January 2021, which was originally expected to take more than six years to complete. Following a ministerial decision in March 2021 to recruit additional staff, the Department revised the … Read more
HM Treasury
View details
14 Conclusion
Thirty-Third Report - Underpayment…
The Department currently has just over 200 people conducting the LEAP exercise.
The Department currently has just over 200 people conducting the LEAP exercise. The State Pension correction exercise requires specialist staff and training and is expected to cost the Department £23.4 million, with over 500 staff employed, by the time the … Read more
Government Response
4.2 The department continually reviews and manages demand across the business, balancing the need to deliver existing services with any in-year pressures or new work. This is the case across … Read more
HM Treasury
View details
15 Conclusion
Thirty-Third Report - Underpayment…
We asked the Department about the findings of the NAO financial audit of the Department’s...
We asked the Department about the findings of the NAO financial audit of the Department’s 2020–21 accounts, which identified nearly 200 of 1,500 cases where the LEAP reviewers had incorrectly assessed arrears on married women’s entitlement.31 The NAO concluded that, … Read more
HM Treasury
View details
16 Conclusion
Thirty-Third Report - Underpayment…
The Department decided to contact pensioners reviewed as part of the State Pension LEAP exercise...
The Department decided to contact pensioners reviewed as part of the State Pension LEAP exercise only if a correction was made to their basic State Pension.36 Other groups of pensioners can receive arrears if they make a claim to the … Read more
Government Response
3: PAC conclusion: The Department has not given people who are worried they have been underpaid enough information to find out what they should do, with the risk that many … Read more
HM Treasury
View details
17 Conclusion
Thirty-Third Report - Underpayment…
When we asked if the Department is able to provide greater clarity to those who...
When we asked if the Department is able to provide greater clarity to those who think they may have been affected, the Department said that it cannot publish guidance for those who may have been underpaid, such as an online … Read more
Government Response
3.2 The department welcomes the endorsement of action already taken with their proposed recommendation, although rejects the Committee’s conclusion. As the department set out in the Committee hearing on 28 … Read more
HM Treasury
View details
18 Conclusion
Thirty-Third Report - Underpayment…
Until recently, the Department did not keep records on pensioners for more than four years...
Until recently, the Department did not keep records on pensioners for more than four years after the date they died due to its data retention policy.40 However, it said it has now 32 C&AG’s Report, paras 18, 4.11 33 Qq … Read more
Government Response
3: PAC conclusion: The Department has not given people who are worried they have been underpaid enough information to find out what they should do, with the risk that many … Read more
HM Treasury
View details
19 Conclusion
Thirty-Third Report - Underpayment…
The Department told us that it began exploring the potential for underpayments from April 2020,...
The Department told us that it began exploring the potential for underpayments from April 2020, following a number of complaints by individual pensioners and a campaign by the former pensions minister Sir Steve Webb and Tanya Jefferies of Thisismoney.co.uk from … Read more
Government Response
The errors were brought to the Department’s attention by individual pensioners and third-party reporting. Most notably Sir Steve Webb, the former Pensions Minister, and Tanya Jefferies of ThisIsMoney.co.uk provided the … Read more
HM Treasury
View details
20 Conclusion
Thirty-Third Report - Underpayment…
Managing Public Money (A4.14) states that ‘when public sector organisations have caused injustice or hardship...
Managing Public Money (A4.14) states that ‘when public sector organisations have caused injustice or hardship because of maladministration or service failure, they should consider providing remedies so that, as far as reasonably possible, they restore the wronged party to the … Read more
Government Response
6: PAC conclusion: In paying pensioners, a lump sum of their arrears, the Department may not be fully restoring them to the position that they would be in had the … Read more
HM Treasury
View details
21 Conclusion
Thirty-Third Report - Underpayment…
Some of those who contacted the Department prior to the LEAP exercise starting in January...
Some of those who contacted the Department prior to the LEAP exercise starting in January 2021 received special payments of interest on top of their underpayment.54 The Department chose to stop paying interest on arrears, citing value-for-money considerations and comparability … Read more
Government Response
6: PAC conclusion: In paying pensioners, a lump sum of their arrears, the Department may not be fully restoring them to the position that they would be in had the … Read more
HM Treasury
View details
22 Conclusion
Thirty-Third Report - Underpayment…
Since our evidence session Sir Steve Webb has also drawn our attention to a potential...
Since our evidence session Sir Steve Webb has also drawn our attention to a potential systemic error affecting divorced pensioners. The NAO report states that “the Department did not find any significant evidence that it had failed to properly process … Read more
Government Response
7.2 The department undertakes a yearly review of a randomly selected sample of benefit cases. In reviewing a recent sample of 1500 state pension cases, the department did not find … Read more
HM Treasury
View details
Correspondence 3 letters
25 Apr 2022 Joint correspondence from Rt Hon Stephen Timms, Chair, Work and Pensions Committee and Dame Meg Hillier, Chair, Public Accounts Committee, re State Pension Underpayments, dated 20 April 2022
Parliament page
14 Dec 2021 Correspondence from Sir Steve Webb, Partner, LCP, re State Pension Correction Exercise, dated 7 December 2021
Parliament page
23 Nov 2021 Correspondence from Peter Schofield CB, Permanent Secretary, Department for Work and Pensions, re inquiry into underpayments of State Pension, dated 15 November 2021
Parliament page