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200,000 women in line for automatic £13,500 average payout due to state pension error

200,000 women in line for automatic £13,500 average payout due to state pension error

Around 200,000 women could be owed an average of £13,500 after their state pensions were underpaid, new figures reveal. These payments will now be made automatically following a Government review - although some women, depending on their circumstances, will still need to claim. 

The Government's repayment programme, which launched in January, comes after the problem was first highlighted by former pensions minister Sir Steve Webb last year. This prompted an investigation by the Department for Work and Pensions (DWP), carried out between May and December 2020, which revealed there had been systematic underpayment of state pensions to certain women.

Several different groups of women are impacted, although everyone else will still need to claim themselves. See below, as well as our Are you one of 10,000s of women missing out on £1,000s of state pension? guide for more info. 

Some women are due automatic payouts

The following groups of women will be owed automatic payouts. They initially missed out on an automatic top-up due to a DWP IT failure:

  • Married women who hit state pension age before April 2016 and whose husbands turned 65 on or after 17 March 2008. This applies if your state pension is less than 60% of your husband's basic state pension.
  • Widows whose pension wasn't increased when their husband was still alive. This applies if you hit state pension age before April 2016 and got less than 60% of your husband's basic state pension while he was still alive.
  • Widows who may have been underpaid since their husband died. Widows will often see their basic state pension increase when their husband dies, based on their late husband's contribution, plus some get extra on top from the 'second state pension'.   
  • Women aged 80+ who get a state pension of less than £80.45/wk – whether they're married, widowed, divorced or single. This little-known 'category D' non-contributory state pension isn't dependent on the national insurance contributions you or your spouse may have made.
  • If you're the heir of a woman who was underpaid state pension while alive and has since died. 

Payouts may take months to process

Until now, these women had to reclaim this cash themselves by asking DWP. But DWP is now systemically working its way through cases to find out who's been underpaid. It says it will contact people directly by letter and they will be given the money owed automatically. Payments will be made via the same method as people receive their state pensions. However, consideration of 'special payments', such as for loss of interest, will not be made. 

There's no timeframe for when people will be repaid, though DWP adds that the exercise may take months. If a person who is owed money has died, it will be paid to the individual's estate. It's unclear exactly how many women are affected or how much they're owed, but it's thought to be around 200,000 people with average payouts worth £13,500. Total payouts are estimated to be around £3 billion over the six years to the 2025/26 financial year, a report published by the Office for Budget Responsibility this week found. 

We've asked if you can continue to claim yourself or if you need to wait for DWP to contact you and we'll update this story when we know more. A DWP spokesperson said: "The action we are taking now will correct the historical underpayments that have been made by successive governments and anyone impacted will be contacted by us to ensure they receive all that they are owed.”

Other women need to proactively ask for money owed

But it's not just the women detailed above who may be missing out on a state pension boost. Others could be due cash too, although they won't be covered by the Government's redress scheme. If you fall into any of the below categories you'll most likely need to contact the Government to get your money back.

  • Married women who hit state pension age before April 2016 and whose husbands turned 65 before 17 March 2008. 
  • Divorced women who should have benefited from their ex-husband's national insurance record. 

You can do a quick initial check to see if you may be owed using an underpaid state pension calculator developed by pensions advisory firm Lane Clark & Peacock, which Mr Webb now works for. If you think you're impacted, contact the Government's Pension Service and ask about your situation. Call 0800 731 0469, or see other contact details on the Pension Service website.

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