Government should expand £1bn underpaid women’s state pension correction exercise to divorcees as new errors emerge
- Discovery of underpayments to divorcees of up to £60,000 in some cases
- 720,000 divorced women receive old (pre 2016) state pension according to DWP
- 40,000 of these not even getting standard £82.45 p/w rate for a married woman
- A divorced woman can in some cases get up to a full basic pension (£137.60) using her ex-husband’s contributions
The Department for Work and Pensions should expand its current £1billion underpaid women’s state pension exercise, unearthed by This is Money and former pensions minister Sir Steve Webb, to divorcees.
Webb is seeking the inclusion of divorced women, following the discovery of underpayments to divorcees of up to £60,000 in some cases.
Divorced women are currently excluded from the correction exercise as the DWP believes there is no ‘significant evidence’ of errors among this group.
Under the old (pre 2016) state pension system, a divorced woman could have her state pension assessed using her ex husband’s contributions up to the date of their divorce.
There are 720,000 divorced women receiving the old (pre 2016) state pension, according to DWP figures from October.
The DWP has accepted that 40,000 of these are not even getting the standard rate for a married woman of £82.45 per week.
A divorced woman can in some cases get up to a full basic pension (£137.60) using her ex-husband’s contributions, suggesting that well over 100,000 cases may be worth checking as a mere 1 per cent error rate would imply tens of millions of pounds in underpayments.
The type of error that has caused problems for widows and others could equally be expected to arise the case of divorced women.
Why are some women being underpaid state pension?
An estimated 134,000 women have been underpaid state pension in a £1billion scandal uncovered by Webb and This is Money more than a year ago.
The huge bill results from a failure to increase some women’s payments when their husbands reached state pension age or died, or when they themselves reached the age of 80.
We have reported many stories of women receiving payouts of tens of thousands of pounds – and in a couple of cases more than £100,000 – after being deprived of the correct state pension due to DWP errors.
Meanwhile, our sister publication Money Mail highlighted last year how older women who got divorced later in life could be missing out on thousands of pounds in state pension.
Have you been underpaid? Find out what to do here.
In the case of widows, the DWP accepts that there are tens of thousands of cases where the Department was notified of the death of a spouse, but no action was taken to reassess state pension entitlement.
Yet when women have reported a divorce, the DWP seems to believe that action has always been taken to reassess her state pension.
Growing numbers of individual case studies have been identified where divorced women have been underpaid because of DWP errors.
For example, This is Money recently reported how a divorced elderly woman on a meagre state pension recently received nearly £17,000 from the DWP after it repeatedly botched her payments.
Josephine Cameron, 73, was ignored or misinformed by staff who failed to spot she was on the wrong amount six separate times since 2015.
A similar error occurred in the case of a 77-year-old, Yvonne Hooper, who assumed she did not qualify for a state pension.
Yvonne who was widowed as a young woman and twice divorced by the time she reached pension age in 2004, had never thought she was entitled to a pension on her ex-husband’s contributions.
When she recently made a claim, the DWP accepted that she was entitled to the full basic state pension of £137.60 per week as well as a £60,000 backpayment.
In his letter to the Department, Sir Steve Webb pointed out that the DWP initially dismissed complaints by widows, married women and others as isolated one-off cases, before eventually accepting a systematic problem.
Given the complexity of the state pension rules for divorcees, the former minister argues there is actually more potential for error in these cases, yet DWP’s position remains that there is no need to review the position of divorcees as part of its current exercise.
Steve Webb said: ‘Given the large-scale errors on state pensions for widows, married women and the over 80s, it seems implausible that DWP has an unblemished record when it comes to the pensions of divorced women.
‘A series of individual cases has highlighted blunders which have led to divorced women being underpaid by tens of thousands of pounds, in some cases for a decade or more.
‘The Department has dismissed concerns around this group far too lightly and should take another look to assess the scale of the problem and then take action to put things right.’
A copy of the letter has been sent to the chairs of the Work and Pensions Committee and the Public Accounts Committee as well as to the head of the National Audit Office.