80,000 women to miss out on £13,500 payout due to state pension error

THOUSANDS of women are to miss out on a share of a £3billion payout after a state pension blunder left them underpaid.

This week we reported how 200,000 women are owed an average of £13,500 each after the pension system failed to give them an automatic pay rise in an error that stretches back nearly 30 years.

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But now it has been revealed up to 80,000 married women entitled to the pay rise before March 2008 won’t be able to claim the cash, reports the Daily Mail.

Women who retired on small state pensions before April 2016 were supposed to see pension payments go up when their husbands reached retirement age.

Payments should have gone up by 60% of their husband’s basic state pension, which was the amount that women with low National Insurance payments got under the old pension system.

The compensation comes after a campaign by This is Money and former pensions minister Sir Steve Webb.

But thousands of women are set to miss out due to a rule change in 2008 that saw payments turn automatic.

Before then, women had to apply to get the full sum they were owed, meaning the onus fell on them.

The law currently means they can’t backdate a claim further than 12 months, leaving them out of pocket.

Sir Webb estimates the number of women to be affected to be between 70,000 and 80,000.

He told the newspaper: “If they had any idea they could have claimed a bigger pension, they would have done so.

“They clearly did not know and they government did not make sure they knew. (The Government) could do something about this group, but they are just hoping they go away.”

Exactly how much you are owed depends on individual circumstances.

The Department for Work and Pensions (DWP) has promised to correct the historical underpayments and will contact those who are affected.

But a spokesperson told the Daily Mail: “Married women whose husbands reached state pension age after them, but before 17 March 2008, were required by law to make a separate claim.

“Once an application is made, women can receive a backdated payment but the law limits that backdating to a period of 12 months.”

How did the pension error happen?

The underpayment error happened when an old pension scheme policy, which meant women’s pensions were linked to their husband’s, was changed in 2016.

Currently, we have a system where there’s an old state pension, which is referred to as the basic state pension, and the new state pension.

The old state pension was for those who reached retirement age before April 6, 2016, while the new state pension is for those who reach retirement age after this date – although there is some crossover for people who’ve accrued National Insurance contributions under both systems.

It was decided that married women could pay a reduced rate of NI contributions, known as the “married woman’s stamp”.

This meant they were not paying towards their own state pension, but when their husband retired they could get an uplift to 60% of his pension so long as he had a full record of contributions.

Married women who had not paid the stamp but had missed out on making contributions due to staying at home with the kids also qualified for the boost to 60%.

The policy was deemed unfair and was changed in 2016 so women’s pensions were no longer linked to their husbands.

But campaigner and former pensions minister Sir Steve Webb discovered that women, who have an old state pension and retired before 2016, have not been getting the increase to 60% — and are due payouts.

Opperman recently explained that it occurred because junior civil servants failed to manually update the woman’s individual records during past decades.

He said that its IT systems are meant to flag when an individual’s State Pension amount should be increased.

DWP staff would then respond by changing the pension amount manually but in some cases, this did not happen.

Women who became eligible for the 60% boost between 2008 and 2016, should have had all their losses repaid because the Government should have upped their pensions automatically.

But those whose husbands retired before April 2008 had to apply for the extra cash themselves. 

Women in this position who missed out could only get a year of back-dated payments and Sir Steve called on the Government to launch a review into the policy.

He told The Sun: “It is scandalous that so many women have been underpaid for so long.  It is good that the government is finally addressing the issue but it needs to do so much more quickly. 

“Some of those who were underpaid have already died and more will do so before the government gets to the end of this process.  

“It is also shocking that the government plans to stop paying interest on these back payments.  It is not the fault of these women that they have been underpaid and they should not lose out as a result”.

How do I get paid?

If you use the LCP calculator and think you’re eligible for a top-up in either scenario, then the DWP should pick up the error in their own records too.

The DWP started working to fix the problem on January, 11 2021.

A department spokesperson previously told The Sun that a specialist team of around 150 people has been set up to deal with the corrections. 

If you are owed money, you will have to sit tight and wait for the DWP to send you a letter confirming your payment.

The spokesperson said the team is manually working through each case as quickly as they can.

Although they said they could not give a specific time frame of when people should receive their money, it could take years to get through the cases.

They told The Sun: “The action we are taking now will correct the historical underpayments that have been made by successive governments. 

“Anyone impacted will be contacted by us to ensure they receive all that they are owed.”

For more information, you can call the Pension Service.