Pensioners were shortchanged by a record £670 million last year, mainly due to civil servant errors.
New figures show state pension underpayments hit a new high in 2022-2023, compared to £540 million in the previous financial year.
Many of those who lost were widows who were denied extra payments they were allowed to inherit from their deceased husbands.
Other women received less than they earned because civil servants had received their national insurance contributions incorrectly.
In total, errors by officials accounted for £580 million of the underpayments, while errors by plaintiffs themselves made up the remaining £90 million.
New figures show state pension underpayments hit a new high in 2022-23, up from £540 million in the previous financial year (stock image)
The Department for Work and Pensions admitted in a report on fraud and errors in the benefit system: ‘The state pension underpayment rate was 0.6 per cent (£670 million) in FYE 2023, which was the highest level on record, compared to 0, 5 per cent (£540 million) in FY 2022.”
Former Pensions Minister Sir Steve Webb labeled the figures “shocking” and said: “Urgent action is needed to improve administration so that pensioners can be confident that the pension they receive is correct.”
The DWP randomly sampled thousands of claimants to calculate the numbers, so it doesn’t know exactly how many people are underpaid and by what amount.
Separately, however, the department has reviewed hundreds of thousands of historical cases to identify and reimburse retirees who have been shortchanged.
So far, the research has identified 173,538 historic cases of £300m underpayment, with the average widowed pensioner being some £11,521 in arrears, while those in other categories owe much less.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: ‘The government is making progress in making these repayments but the scale of the problem is huge and it will take time to complete but in the meantime many of these have been people under financial pressure that they didn’t have to be.”
In total, errors by officials accounted for £580 million of the underpayments, with errors by plaintiffs themselves making up the remaining £90 million (stock image)
Total state pension spending rose by £5.2bn to £109.7bn, out of a total of £233.8bn for the total social security system.
But fraud and error across all payments fell slightly from £8.7bn to £8.3bn, with a marked drop in Universal Credit losses.
Mel Stride, Secretary of Work and Pensions, said: “We are cracking down on fraudsters, and today’s numbers show encouraging progress as DWP works to prevent new fraudulent claims as well as collar cases where people have blatantly exploited the system.”
In a conversation with reporters yesterday, he emphasized that it was not necessary to make a decision now about when the state pension age should rise to 68 years.
He said the increase is likely to take place in the 2040s, but added: “It will be for someone else to sift through the data in the next parliament.”
“You can wait until the first few years of the next parliament to make that decision and still give people ten years’ notice of your decision and then make the change.”
To date, the review has identified 173,538 historic cases of £300m underpayment, with the average widowed pensioner being some £11,521 in arrears, while those in other categories owe much less (stock image)
He also said there are no plans to change the Conservatives’ flagship triple lock, which means state pensions rise in line with inflation, wage increases or 2.5 percent a year.
It was controversially suspended in 2022 following the recovery of skewed earnings from the lockdown, but was reinstated this year as retirees saw their retirement income rise in line with rising inflation.
When asked if he wants the treble lock to remain intact in the next Tory manifesto, Mr Stride said: “There are no plans to change the treble lock.
“I don’t know what will be in the next manifesto, but there are certainly no plans to change that at the moment.”
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