DWP making new errors on widows’ state pensions – LCP launches new tool to help people check

A new tool to help widows and widowers check their state pension has been launched as it emerged that DWP is making new errors on recent state pension claims. 

Historic errors on widows and widowers

Since 2021, DWP has been undertaking a correction exercise designed to fix previous state pension errors relating to three groups including widows / widowers.  As of 31st March 2024, over £280m had been paid in arrears to around 23,000 widows / widowers who had wrongly missed out on inherited state pension from a late husband, wife or civil partner.  And with the correction of historic errors for widows/widowers set to run to the end of 2024, DWP estimates that the total amount paid out could be more than double this figure, at around £650m to over 50,000 widows/widowers in total.

New errors

Former pensions minister and LCP partner Steve Webb has however identified a new group of cases where DWP appears to be making errors.  These are people claiming the new state pension *who were already widowed* when they retired.  He has recently been contacted by four separate people who had not been awarded any inherited state pension when they retired and had been told in writing or over the phone by DWP that they were not entitled.  In all four cases, this was incorrect.  An increased amount of state pension has been put into payment and arrears have been paid.

Who is affected?

The group most affected are those who are widows or widowers at the point when they claim their new state pension and where either:

• The late spouse reached pension age before 6th April 2016 OR
• The late spouse died before 6th April 2016

In this case, the widow or widower can potentially inherit at least 50% of any ‘additional state pension’ which the late spouse built up, plus 50% of any ‘Graduated Retirement Benefit’.

The exact amount of inherited state pension will depend on individual circumstances, but will be greater if:

• The late spouse was an employee (rather than self-employed) AND
• The widow / widower is *not* receiving a widow’s pension from a company pension scheme (as this may replace part of any inherited state pension due).

More generally, the amount of inherited state pension anyone is due can depend on things like:

• Whether the claimant comes under the old or new state pension system
• Whether the late spouse came under the old or new state pension system
• When the late spouse died
• Whether the late spouse was a member of a ‘contracted out’ occupational pension scheme

New tool

Because the rules are complex, pension consultants LCP have now developed an online tool to help people understand what state pension they are entitled to inherit on top of their own state pension.  

The new tool can be found at: go.lcp.com/inheritingstatepension

The company’s previous tool to help married women check for underpayments had over one million visits and helped large numbers of women to identify that they were owed money.

Commenting, Steve Webb, partner at LCP, said:

 “Having had to spend years checking hundreds of thousands of historic state pension calculations for errors, you would hope that DWP would be making sure that new claims are handled correctly.  But we have found worrying evidence that this is not the case.  There seems to be a particular problem for people who are widows or widowers when they claim their state pension. 

"In some cases DWP seems to have failed to automatically add any inherited state pension they were due from a late partner.  These cases may well be the tip of an iceberg, with many thousands of people potentially underpaid.  The Department needs to launch an urgent investigation into the scale of this problem.  In the meantime I hope that our new online tool will help people to check what they are entitled to and to report any errors.”

Latest estimates of amounts so far paid back as part of the existing correction exercise are on p129 of the latest DWP Annual Report and Accounts: DWP annual report and accounts 2023 to 2024.  DWP’s own projection of the final bill is on p364.