A State Pension boost of around £6,600 is expected to have landed in thousands of bank accounts by the end of next week.
Underpayments worth millions are being handled by the Department for Work and Pensions (DWP). Many other cases will be resolved in the new year, with those people in line for an average of £11,500 in payouts, Birmingham Live reported.
Pensions Minister Paul Maynard has issued an update confirming that two groups of people affected by the errors should have had back pay “by the end of 2023”. Labour MP for Tooting, Mr Maynard, answered a question from Dr Rosena Allin-Khan.
He responded: “The overall rate of State Pension underpayment due to official error remains low as a proportion of expenditure (0.5% in 2022/2023). Where errors do occur, we are committed to fixing them as quickly as possible.
“The Department of Work and Pensions is currently progressing Legal Entitlement and Administrative Practice (LEAP) exercises to rectify errors in the State Pensions caseload. Our priority is to ensure that everyone receives the State Pension payments to which they are entitled. DWP is on track to complete the exercise for Category BL and Category D cases by the end of 2023.”
Category BL refers to married women who should have qualified for a State Pension because of their partner’s National Insurance record and Category D to women on a very low or no State Pension who should receive one when they reach the age of 80. For Category D pensioners, the average payout is £2,710, and for Category BL the average payout is £6,630.
Mr Maynard says that between January 11, 2021 and October 31, 2023, the DWP has reviewed 593,964 cases. It has identified 82,323 underpayments, and paid out £497 million in arrears.
Who will get the State Pension backpay?
The DWP says the underpayments fall into three groups:
1. Married – those who should have qualified for a Category BL pension because of their partner’s National Insurance record
Those with insufficient National Insurance (NI) contributions to qualify for a basic State Pension may be entitled to a pension through their husband, wife or civil partner’s NI contributions. This is called a Category BL State Pension and can give them a basic State Pension of up to £93.60 a week (at 2023/2024 rates).
People who are married or in a civil partnership who reach State Pension age before April 6, 2016 may qualify for a Category BL uplift, without needing to make a separate claim. This may be the case if their husband, wife or civil partner became entitled to their State Pension on/after March 17, 2008, or had already reached State Pension age prior to the customer claiming their State Pension.
Around 53,000 people should have benefited from their spouse’s or civil partner’s National Insurance record and will receive backpay totalling £339 million. Average arrears are £6,630.
2. Over 80 – those who should have had a Category D State Pension when they reached 80
People who reach the age of 80 and are getting no basic State Pension or a basic State Pension amount of less than £93.60 a week can qualify for a Category D State Pension of £93.60 a week. The DWP has identified 37,000 people who should have had an increase in their pension at their 80th birthday.
As result, a total of £146 million will be paid to those who have missed out as a result of the DWP’s administrative errors. Average arrears are £2,710.
3. Widowed – those who should have inherited State Pension from their late partner
Those who are widowed and are getting a basic State Pension of less than £156.20 a week (at 2023/2024 rates) can also derive basic State Pension from their late spouse or civil partner. This may give them a basic State Pension of up to £156.20 a week. They can also inherit between 50 per cent and 100 per cent of any additional State Pension and 50 per cent of any Graduated Retirement Benefit.
There are 44,000 widows and widowers who should have inherited more State Pension entitlement from their deceased partner. Some £568 million will be paid in total to people in this category. For this third group, the process of correcting underpayments could run through to late 2024, the government previously said. Average arrears of £11,521 are being paid out in this category.
In addition, the DWP is also in the process of identifying separate errors relating to those who might have been entitled to Home Responsibilities Protection (HRP) between 1978 and 2010 but don’t have it listed on their records. HRP – a scheme to ensure stay-at-home parents and carers were still entitled to a State Pension – has since been replaced by National Insurance credits. If someone was receiving Child Benefit before May 2000 but did not provide their National Insurance number on the claim, their NI record may not show the correct number of qualifying years of Home Responsibilities Protection, which could affect their State Pension entitlement.
Mr Maynard added: “The Home Responsibilities Protection (HRP) corrections activity started in Autumn 2023 with HMRC sending letters to potentially affected customers, who are invited to make a claim for missing HRP. Once a customer’s national insurance record has been corrected, DWP will process any state pension changes to ensure ongoing payments are correct and any arrears are paid as quickly as possible. Updates on progress will be communicated as the exercise progresses.”
HMRC is contacting those who meet these criteria to find out if they are eligible. The DWP will then recalculate their State Pension entitlement and let people know whether they are due any arrears.
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Robert Johnson is a UK-based business writer specializing in finance and entrepreneurship. With an eye for market trends and a keen interest in the corporate world, he offers readers valuable insights into business developments.
