Underpaid state pensions: A £3bn win for Steve Webb & This is Money

The cost of fixing underpaid women’s state pensions will be £3billion it has been revealed – and people wouldn’t be getting that money without the work of This is Money’s journalist Tanya Jefferies and columnist Steve Webb.

The £3billion figure slipped out among all the others packed into the Office for Budget Responsibility’s Budget report yesterday.

It highlights a colossal short-changing of state pensioners and I would urge our readers to check their pensions, if they are of an age to be affected, or encourage relatives or friends to look at theirs.

Over the past year, we have revealed case after case where people were owed back payments that in some instances ran into tens of thousands of pounds – and will get a better state pension from now on.

Former Pensions Minister Steve and Tanya work tirelessly on his weekly pension column and it was a reader question to this early last year that first flagged the issue.

A husband wrote in explaining that his wife had discovered she was only getting 39 per cent of his state pension when she should be getting 60 per cent, and had been told by the DWP that they could only backdate her payments by 12 months: he asked if this was right?

Steve explained that married women who retired on small state pensions before April 2016 should get an uplift to 60 per cent of their husband’s payments once he reached retirement age.

Since 2008, the increases are supposed to be automatic, but before that women had to apply to get the full sum they were due or they could be underpaid.

Steve added: ‘Given that the onus was on the individual to claim an uplift prior to March 2008, this makes me think that there could be quite a few more married women in the same position as your wife.’

His suspicion turned out to be right and as Steve and Tanya widened their investigation they found lots more cases of women being underpaid state pension.

A few months later, we revealed that two other women who contacted us had received £9,000 and £5,000 in state pension payments they missed out on over years of being underpaid – and highlighted that many more retired women could be in line for payouts worth thousands.

Steve and Tanya pushed the DWP for answers as to how this had happened, whether the error was widespread, and what it was doing to help women underpaid state pension.

Those answers were not easy to come by – although we did uncover that a probe was taking place – and it is still not clear exactly how the blunders that led to this situation took place.

The current Pensions Minister Guy Opperman recently explained that many elderly women lost out on state pension because junior civil servants failed to manually update their individual records during past decades.

He told MPs it was a ‘significant legacy issue’, with hundreds of civil servants now working to sort it out.

In some cases, underpayments have been astonishingly big. Last summer, we reported on a widow who got back £115,000.

There is also an indication that while all married women with lower state pensions could be affected, widows may be at particular risk of having suffered underpayments.

Of course, an issue like this doesn’t just stay with one publication. Steve has campaigned on it in his job at pension consultancy Lane, Clark & Peacock and the story has been covered and investigated throughout the financial press.

But when that £3billion figure emerged yesterday, it marked a real victory for This is Money’s journalism and for Steve and Tanya’s tenacity and hard work on a campaign to help people out.

The best bit about it though is the difference the huge sum will make once it is divided up: £3billion is a number so large it feels meaningless, the thousands of pounds in back payments and extra money in pension payments from now on for women affected won’t be.