More than 74,000 married women are to receive a windfall of up to £23,000 after years of being short-changed by the Government on their state pension.

In total, 200,000 women who were underpaid the state pension for years are due refunds totalling £2.9bn. Large numbers of elderly, widowed and divorced women have been forced to get by on a reduced stipend for years due to a Government oversight.

New figures released by the Office for Budget Responsibility have shown the average arrears payment for the first time. Widowed retirees are owed an average £17,000, this rises to £23,000 for married women.

Meanwhile, 72,000 over 80s have been underpaid more than half a billion pounds and are to receive an average payment of more than £10,000 over the next five years. The Government is due to hand over £570m every year until 2026 to cover for the loss of income.

The underpayment of over 80s is “inexcusable incompetence”, former pensions minister Sir Steve Webb has said.

From the age of 80, everyone is entitled to the state pension regardless of their National Insurance contributions. Retirees receive the “over 80” state pension if they either were not eligible beforehand or if they were paid less than £80.45 per week on the basic state pension.

Slamming the Department of Work and Pensions for the “appalling” error, Sir Steve, who is now partner at consultancy Lane Clark & Peacock, said there should not have been any difficulty in paying a standard rate of pension to anyone aged 80 or more. He added: “Getting complex calculations about pensions wrong for tens of thousands of widows and married women is bad enough. To fail to do even that basic task amounts to incompetence.”


Baroness Ros Altmann, also a former pensions minister, called for a full investigation and report into what went wrong. She said: "It has taken a long time, since the problem was first discovered, for the issue to be taken seriously and the DWP’s own helplines seem to have falsely assured many of the women who claimed they were being underpaid that they were actually receiving the correct amount."

It will still be a long time before all those affected are reimbursed and there is a concern that many will sadly pass away without enjoying the extra money, Baroness Altmann added.

In November, the DWP severely underestimated the total cost it would have to pay for the mistake, forecasting a cost of £100m. It has since emerged that it will have to compensate pensioners for close to £3bn. It will be a major embarrassment for the DWP, which identified the oversight in 2020.

Steven Cameron, of Aegon, a pension provider, said it is crucial that people are confident they will receive what they are due as the system is "incredibly complex". He said: "What’s now critical is that underpayments are assessed and paid as quickly as possible, to these women, many of whom are in the later years of their lives and may be continuing to struggle financially."

Hundreds of thousands of women have been underpaid as many had missed out on a one-off increase in payments as the process of claiming an additional amount of state pension based on a husband’s records was only made automatic in 2008. Prior to this date women had to apply for the uplift.

Some women who have already enquired if they were owed anything were shocked to receive astonishing six-figure sums. The systemic underpayments date back in some cases to the 1990s.

Source: https://www.telegraph.co.uk/money/consumer-affairs/married-women-receive-23000-state-pension-windfall/