Urgent warning for tens of thousands of women who may have lost out on state pension – could you be owed cash?
DIVORCEES may be unfairly missing out on thousands of pounds’ worth of state pension, an MP has warned.
The Work and Pensions Committee has published a letter to the DWP raising concerns around the significant number of divorced women receiving low state pension amounts.
The DWP is currently undergoing a mass correction exercise relating to a series of state pension errors that have resulted in underpayments.
Several separate errors have come to light including for married women, widows and some elderly retirees.
The latest concern, raised by Labour MP Stephen Timms, chair of the Work and Pensions Committee, is that some divorced women are not having their state pensions reassessed after ending their marriages, which is affecting their state pension entitlement.
Under the old state pension system, women who were divorced could receive benefits from their ex husband’s contributions in two ways:
- If she did not re-marry before she reached retirement age, she could take account of her ex-husband’s contributions up to the date of their divorce; where his National Insurance (NI) record was better than hers
- If she divorced after retirement and notified the DWP, the DWP should reassess her state pension, taking account of her ex-husband’s contributions right up to her retirement
In the second case, this would entitle the divorced woman to a full basic state pension of £169.50 a week.
Yet according to evidence submitted by consultancy LCP to the Public Accounts Committee, a significant number of divorced women are receiving low state pensions.
The evidence showed some 40,000 women are receiving less than 60% of the full amount.
While it is not believed this latest error is affecting a huge number of people, the losses for any individuals affected could be significant, according to former pensions minister Steve Webb.
Mr Webb, now partner at consultants LCP, said: “Given the massive scale of errors on state pensions for married women, widows and the over 80s, it is stretching belief to think that divorced people’s pensions have all been worked out perfectly.
“A particular issue is cases where the DWP was notified of a divorce post-retirement and whether this always resulted in a state pension reassessment.
“For any given individual the difference could be very substantial, especially where a woman had a poor NI record but her ex-husband had a full record.
“The DWP should do a thorough search for potential errors of this sort”.
Who may be affected?
The latest error is likely to mostly affect divorced women who reached state pension age before 2016, although some men are also thought to be affected.
Most men tend to get a full basic pension, but there may be some cases where a man needed to use his ex-wife’s contributions and this was not done correctly.
Those affected could be entitled to a full basic state pension of £169.50 a week this tax year, but evidence suggests many are receiving less than 60% of this sum.
This means that divorced pensioners could be owed around £67.80 a week or £3,525.60 a year.
When can I expect my cash back if I was underpaid?
The DWP has until May 1 to respond to the concerns raised by Mr Timms, although it initially said there was “no evidence of systemic error due to missing action taking on notifications of divorce”.
We will report the DWP’s response when it is released.
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