Uncovered errors in state pensions - could you be one of the impacted individuals?

In a series of concerning developments, it has been revealed that thousands of people who are eligible for state pensions may be facing issues due to incorrect changes in pension entitlement regulations. This issue has been highlighted by Sir Steve Webb, a former pensions minister, who has warned of potential mistakes made by the Department for Work and Pensions (DWP) in calculating the state pension for divorced individuals and widows and widowers.

The government has been accused of making slow progress in reviewing these cases. Webb has demanded an urgent investigation into the scale of the problem, pointing out that the group most affected are those who are widows or widowers at the point when they claim their new state pension.

The DWP has acknowledged delays in processing state pension awards, stating that these occur when not all the required information is provided. The department has assured that it will revise the customer's claim as soon as possible once it has the necessary documentation.

To help individuals navigate this complex issue, LCP has developed a new state pension tool to help widows and widowers check their state pension and understand what additional money they are entitled to inherit on top of their own state pension. The government also has a tool to assess someone's eligibility for inherited state pension amounts.

In some cases, the DWP seems to have failed to automatically add any inherited state pension that the claimant was due from a late partner. This oversight could potentially cost retirees £40,000 over a 20-year retirement. In an extreme case, someone who had wrongly not been given inherited additional state pension could inherit the maximum additional state pension, which is more than £200 per week.

To address this issue, the DWP is currently undertaking a correction exercise to fix state pension errors for widows and widowers, which will run until the end of this year. As a result, more than £280 million has been paid in arrears to around 23,000 widows and widowers who had wrongly missed out on an inherited state pension.

The government had previously identified over £570 million of state pension underpayments, but this figure is set to soar. The exact amount of inherited state pension will depend on personal circumstances, but it can potentially increase if the late spouse was an employee and the widow/widower is not receiving a widow's pension from a company pension scheme.

In light of these developments, people widowed before they turn 66 are being urged to check they are not losing out on any state pension that they should inherit from their spouses. It is crucial for individuals to ensure they are receiving the correct payouts to avoid potential financial hardships in their retirement years.

Uncovered errors in state pensions - could you be one of the impacted individuals?