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
6 Recommendations
16 Conclusions
1 Report
1 Oral session
3 Letters
1 Event
Activity timeline 6 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
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 Recommendation Not Addressed
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
The response references clear, ambitious targets and a regulatory environment that stimulates competition and investment in the market. It provides information about gigabit coverage and full fibre networks.
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3 Recommendation Accepted
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
The department welcomes the endorsement of action already taken with their proposed recommendation, although rejects the Committee’s conclusion and refers to existing information on Gov.uk.
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4 Conclusion Accepted
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
The government agrees with the Committee’s recommendation and has allocated additional resource, both from internal moves, and external recruitment to have over 1400 frontline delivery colleagues working on the exercise and staff who had joined for the exercise on fixed term appointments were made permanent in December 2021.
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5 Recommendation Accepted
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
The Department agrees to provide periodic updates to the Committee and the Parliament on the progress of the State Pension LEAP exercise and the speed of processing the backlog in the new State Pension and has committed to providing a further update at the next fiscal event.
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6 Recommendation Not Addressed
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
Government Response
The response outlines milestones for assessing delivery beyond 2025, including market surveys, contract signings, and clarity on premises beyond the programme's scope. It expects to have robust profiles for the period beyond 2025 by Summer 2023.
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7 Recommendation Not Addressed
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
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 by the National Audit Office, the Committee took evidence on Monday 15th November 2021 from the Department of Health and Social Care; Crown Commercial Service; NHS Business Service Authority and NHS Shared Business Services Limited.
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1 Conclusion Acknowledged
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
The committee took evidence from the Department for Work & Pensions on the issue of underpayments in State Pension based on a report by the Comptroller and Auditor General.
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8 Conclusion Accepted
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
The department has made significant progress to transform customer experiences and replace legacy IT systems through the new Get your State Pension (GySP) service, introduced in 2018. Complex work is now brigaded into specialist areas and revised work instructions have been issued and enhanced checking is undertaken, targeting elements of the new instructions to ensure compliance.
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9 Conclusion Accepted
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
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 inform organisational learning and continuous improvement plans. It will share its Quality Framework improvements with the Committee.
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10 Conclusion Not Addressed
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
The Department rejects the Committee's assertion and claims to have been taking action to prevent future errors since Summer 2021 by reviewing its Quality Framework.
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11 Conclusion Acknowledged
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
The committee concludes that the management information is still lacking in areas such as reporting on State Pension enquiries and complaints and the Department acknowledged that it ‘will not eliminate all official error anywhere across the Department’ despite the exercise it is going through’.
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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
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13 Conclusion Accepted
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
Government Response
The government states the recommendation is implemented, detailing how it continues to manage demand and allocate additional resources, including recruitment and internal moves, to the LEAP exercise to maintain its delivery and revised completion date.
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14 Conclusion Acknowledged
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
The committee concludes that the Department redeployed its more experienced caseworkers from its Retirement Services division to the LEAP exercise and backfilled their posts from elsewhere in the Department or through new joiners, which placed additional strain on its normal State Pension operations.
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15 Conclusion Accepted
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
Government Response
The government states the recommendation is implemented, detailing significant progress in transforming customer experiences and replacing legacy IT systems, enhancing the Customer Account Management system, strengthening quality assurance processes, and implementing IT changes within the LEAP exercise to reduce errors.
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16 Conclusion Acknowledged
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
The committee concludes 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.
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17 Conclusion Acknowledged
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
The department welcomes the endorsement of action already taken but rejects the Committee’s conclusion and points to information on Gov.uk. It is working to identify those affected and will contact them and is working with registrar's offices to identify next of kin and will provide a more direct route for enquiries about deceased customers by Summer 2022.
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18 Conclusion Acknowledged
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
The committee concludes the Department prioritizes living pensioners over the deceased, even when their next of kin may be vulnerable, and lacks a plan to trace the next of kin of the deceased.
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19 Conclusion Acknowledged
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 Department 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 January 2020, who provided the Department with example cases of underpayment.
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20 Conclusion Rejected
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
The government disagrees with the Committee’s recommendation and does not intend to change the current legislative position, asserting it is a long-standing principle of personal responsibility for social care in England.
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21 Recommendation Rejected
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
The government disagrees with the recommendation to establish the full extent of the impact on pensioners of receiving a lump sum of arrears of benefit, particularly for larger sums of arrears, and to seek assurance from local authorities that people are not treated prejudicially compared to how they would have been treated had they received the money over their proper period of entitlement, citing existing regulations and the principle of personal responsibility for social care.
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22 Conclusion Acknowledged
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
The committee concludes a potential systemic error affecting divorced pensioners. The Department did not find any significant evidence that it had failed to properly process cases where a pensioner had notified it of their divorce.
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Government Response AI assessment · 21 of 6 classified
Accepted 7
Acknowledged 8
Not Addressed 4
Rejected 2
Total 6 recs + 16 conclusions
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