A substantial crisis is unfolding within the UK’s pension system, illuminating long-standing injustices faced particularly by women. Many older women, some receiving as little as £1 a week, could be on the brink of financial relief thanks to revelations that the Department for Work and Pensions (DWP) has historically underpaid pensions.
This oversight, pinpointed by former pensions minister Steve Webb, exposes systemic failures that have left thousands grappling with financial insecurity for decades. Rachel Vahey, head of public policy at AJ Bell, said this is “one of the biggest benefit scandals of modern times”.
The DWP: short-changing thousands of women
The DWP’s own investigation has concluded that more than 130,000 individuals have been affected by pension underpayments in the last year alone, with total deficits reaching an alarming £804 million. These errors primarily stem from administrative oversights and incorrect recording of National Insurance contributions, specifically before the new state pension system was implemented in 2016.
As the Express reported:
Many of the affected women are receiving less than £1 a week through an outdated scheme called the Graduated Retirement Benefit (GRB) – a relic from the pre-1975 pensions system.
“These women have been left to struggle on paltry sums – it’s a disgrace,” Webb lamented, highlighting the dire situation many find themselves in, often relying solely on one spouse’s pension to survive.
So many of these women, often having put their careers on hold to raise families, have been inadvertently short-changed. The DWP’s current regulations indicate that married women are entitled to receive 60% of their husband’s state pension, equating to around £105 a week if he draws the full rate.
The life-changing amounts owed can lead to backdated payments worth tens of thousands, stretching back to the husband’s retirement. For some individuals, this news has meant a dramatic shift in their financial landscape.
Dramatic shifts
One recipient, Carole Davies from Surrey, experienced a remarkable turnaround when she discovered she was owed £56,000 after years of receiving paltry payments. Similarly, Bernie Weallans from Brighton benefited from a repayment of £20,000 after gaining insights into her entitlement.
Despite the DWP’s acknowledgment of these oversights, critics including Webb and financial experts express growing frustration at the response speed and method of rectification being employed by the DWP.
Reports suggest that the correction process could extend well into 2027, with many affected individuals still unaware of their entitlement. Meanwhile, the DWP is urging all individuals to check their eligibility, yet many remain vulnerable due to the complexity of the system.
Compounding the issue are imploring calls for systemic reform. Experts argue that the DWP’s antiquated computer systems, remnants of the 1980s, not only undermine efficiency but also threaten the integrity of pension distribution.
Recent findings indicated that 134,000 individuals who claimed their state pension before April 2016 did not receive full payments due to outdated infrastructure. This raises a critical question: how many more citizens are struggling silently, denied access to funds that are rightfully theirs?
The DWP: another day, another scandal
The inadequacies of the current approach have provoked ire among activists and advocates for older people, particularly as experts warn of a looming crisis.
As recently as 2021, Labour MP Stephen Timms pointed out that the department’s IT systems are “not fit for purpose,” indicating a pressing need for governmental accountability and reform. The idea that successive governments have failed to rectify mistakes that have persisted for decades is not only disheartening—it is tantamount to abandoning the very people who built this nation.
The spotlight on these pension issues unveils a deeper, more pressing social concern: the financial fragility of older and disabled people in the UK. Many find themselves at the mercy of a bureaucratic machine that seemingly prioritises process over people.
While positive steps are being taken to rectify past mistakes, the urgency of comprehensive reform cannot be overstated. Unless drastic measures are adopted, these systemic failures will continue to reverberate through the generations, leaving thousands in precarious financial situations. Only through proactive measures and genuine accountability will trust in the DWP and in the broader welfare system be restored.
Featured image via the Canary
