£800 Million to be reimbursed due to State Pension errors – over 130,000 people set to benefit
- TBA
- Jun 4
- 3 min read
The UK has a well-established taxation and state pension system. In theory, if you have verifiable contribution records, there should be no errors when calculating and receiving your pension.
However, due to constant changes in state pension policies and related benefits, occasional mistakes may be inevitable.
Recently, the Department for Work and Pensions (DWP) issued a new statement announcing that, due to historic state pension errors, over 130,000 individuals have received a total of approximately £800 million in backdated state pension payments.
State pension errors - Why were pensions underpaid?
According to British media reports, the large-scale underpayment issue stemmed from longstanding administrative errors and systemic flaws.
To rectify these, the DWP launched a large-scale pension correction exercise in 2021, which is expected to continue until 2027.
As of data compiled up to 31 March 2025, the review uncovered 130,948 cases of underpayment, with back payments totalling £804.7 million.
Who was affected by the pension underpayment?
So, who was affected by this pension error?
The affected groups mainly include:
Married women: Those receiving low state pensions that should have automatically increased after their spouse’s retirement, but were not adjusted accordingly.
Widows: Whose pensions should have been recalculated following their spouse’s death but were not.
Individuals aged 80 and above: Whose pension entitlements should have increased upon turning 80, but were not adjusted.
According to DWP data, the average back payment issued so far is as follows:
Married women (Category BL): £5,553
Widows: £11,725
Over-80s (Category D): £2,203
The DWP added that some claimants may fall into more than one category due to overlapping errors.
HRP errors
In addition, the DWP is also conducting a separate correction programme to address historic record-keeping errors related to Home Responsibilities Protection (HRP).
HRP was a policy designed to protect the state pension rights of parents (primarily mothers) who stopped working to raise children prior to 2000.
As of September 2024, HMRC had sent notification letters to over 370,000 individuals, informing them that missing HRP records may have affected their pension entitlements. Among 11,700 cases reviewed by the DWP, 5,344 were found to be underpaid, with a total reimbursement amounting to approximately £42 million.
How can I check if I’m affected?
The DWP has stated that they will proactively contact some eligible women. However, if you are a widow or over 80 years old, you should check whether you qualify even if you have not received a letter.
Pension consultancy firm LCP (Lane Clark & Peacock) has been commissioned to develop a dedicated pension underpayment calculator to help individuals assess whether they might be affected.
Some Advice from TB Accountants
Whether or not you fall into one of the affected categories, it is highly recommended that you proactively check your state pension records to ensure your rights are protected.
If you suspect you may be affected, you may contact the Pension Service directly to understand how to claim any owed amounts, or speak to a dedicated tax advisor to discuss further.
For individuals and businesses looking for UK taxation services, use our contact form to get in touch for more information.
Get in touch with us at info@tbgroupuk.com or for a free one-to-one consultation.
