Millions of people have been receiving the wrong pensions for decades because of government computer failures, it has been reported.
Reports earlier this year in January indicated that more than 134,000 pensions were affected by the errors, which has been known since the 1990s, but the figure is actually in the millions, the BBC reported.
A former minister for pensions described the scale of the problem as “truly mind-boggling” and insisted the Department for Work and Pensions (DWP) must trace those affected “as a matter of urgency”.
The DWP says it is “studying possible remedies.”
Official analysis released last month suggests that 23% of retirees were underpaid, while 17% were overpaid. The problem mainly affects widows, divorcees and women who depend on their husbands’ pension contributions for part of their pension entitlement and is expected to cost the government £1.05billion.
The problem stemmed from an aging computer system introduced in the 1980s which MPs described as ‘unfit for purpose’. The system, known as the Pension Strategy Computer, was unable to accurately increase an element of the public pension called the Graduate Retirement Benefit. In 2002, DWP officials decided that solving the problem would be too complicated, and no solution was found.
It was supposed to be closed in 2020, but was maintained temporarily.
In 2021, the National Audit Office found that problems with the system separately led to 134,000 people who applied for their state pension before April 2016 not receiving their full entitlements. The average underpayment was estimated at around £8,900.
Dame Meg Hillier, chair of the public accounts committee, said: “Many pensioners – most of whom are likely to be women – have been cheated out of thousands of pounds, which they still have not received many years later. “
The errors affect pensioners who first applied for a state pension before April 2016, who do not have a full national insurance record and who should have received certain increases to their basic state pension.
Sir Steve Webb, who was pensions minister between 2010 and 2015 and helped uncover the mistakes, said the lack of transparency around the issue was “enormous”. He added that he was never alerted to the problem while in government.
“The scale of these errors is truly mind-boggling,” he said, adding “Although the absolute size of the errors is generally small, the number of people potentially affected is enormous. More worrying is the complete lack of transparency.
“It beggars belief to hear that a government department could simply decide that it was okay to pay the wrong pension rate for decades, without feeling compelled to tell Parliament or the public.
“If the DWP has sat on this secret for decades, one wonders how much else has just been glossed over.”
A DWP spokesman said: “Our priority is to ensure that every pensioner receives the financial support to which they are entitled and that most graduated retirement benefits are correct.
“Where they are not, the vast majority of overpayments and underpayments are 1p or 2p per week and we are looking for solutions to this problem which has occurred under successive governments.”