Has the Government been paying you the wrong pension?
The Government has admitted that miscalculations by the Department for Work and Pensions (DWP) have caused some pensioners to receive incorrect payments from their state fund for the past four decades. The mistake is estimated to involve tens of thousands of people… so how do you know whether you’ve been affected?
A Financial Times report revealed in June that grievous errors involving poor record keeping and missing paperwork had been made with state pensions – causing citizens to receive too much or too little from their state fund each month.
Whilst HMRC are not looking to recuperate costs, those who were overpaid will be seeing a decrease in the amount they receive.
Alternatively, those who were underpaid will receive an increase to the correct amount, plus the amount they are owed, although this is will not include compensation or interest.
These miscalculations won’t just affect state pensions; some individuals with private sector pensions have been asked to make up the costs of the error, despite the Government being clear that this shouldn’t be the case.
The errors could also have a knock-on effect on future pensioners, who could see their state fund adjusted to take account of the miscalculations.
The Former Pensions Minister, Baroness Ros Altmann stated:
"It is almost beyond belief that thousands of pensioners can suddenly be told they will have their income cut because of mistakes by those supposed to be in charge of paying them the right amount.”
The Government have been criticising private pensions companies for years, and have recently declared plans to strengthen The Pensions Regulator to block employers from taking advantage, but this recent scandal proves that they don’t always get it right either.
With over a million UK residents solely reliant on state funded income, it’s vital for those involved to know whether their monthly pension amount is incorrect.
So how do you know whether your pension has been miscalculated?
If your pension has been affected, you should be contacted by the Department for Work and Pensions. (DWP)
Financial Planner, Sue Sams, of Chesterton House has worked with clients in this situation. She recommends contacting the DWP first about this issue if you’re concerned. You can apply to the DWP through their online website here.
For those that have a private pension, you may be contacted by your previous employer if you’ve been affected. You should then be able to negotiate a solution to the miscalculation.
The data clean-up is due to be completed by 2019, so you should be aware if you’re affected by the end of the year.
Facts in this article were derived from these sources:
https://www.ft.com/content/0bbd7a72-6a5f-11e8-b6eb-4acfcfb08c11
https://www.moneymarketing.co.uk/tprs-beefed-powers-confirmed-db-white-paper/