Pensioners underpaid over £1 billion in state pension scandal, National Audit Office finds

Tom Selby
22 September 2021

•    Around 134,000 pensioners were underpaid state pensions to the tune of £1 billion, National Audit Office report finds
•    Underpayment resulted from years of failures at the Department for Work and Pensions (DWP)
•    Only 94,000 of those affected are thought to still be alive – meaning 40,000 could have died before receiving compensation
•    The DWP has found underpayments of between £0.01 and £128,448.37, with the earliest dating back to 1985
•    Those affected estimated to be owed £8,900 each on average in state pension compensation

Tom Selby, head of retirement policy at AJ Bell: 

“The fact pensioners, some of whom will have been struggling to make ends meet, have been underpaid state pensions to the tune of £1 billion is nothing short of a national scandal. 

“Tragically, of the 134,000 people underpaid by an average of £8,900 each, around 40,000 are estimated to have died before being compensated. 

“Furthermore, those lucky enough to still be with us may have been living in penury when they should have been enjoying their retirement.

“The 94,000 people still alive who are owed money by the DWP need to get it back as soon as possible. They also deserve answers about how this was allowed to happen over such a long period of time. 

“Once compensation has been paid, the Government needs to undertake a comprehensive review of its processes to ensure these mistakes are never repeated. 

“Trust in pensions is fragile at the best of times and failures such as this will not help. Sadly, it will likely take years, if not decades, to rebuild the confidence lost as a result of this scandal.”

Tom Selby
Head of Retirement Policy

Tom Selby is a multi-award-winning former financial journalist, specialising in pensions and retirement issues. He spent almost six years at a leading adviser trade magazine, initially as Pensions Reporter before becoming Head of News in 2014. Tom joined AJ Bell as Senior Analyst in April 2016. He has a degree in Economics from Newcastle University.

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