My dad who died aged 100 was underpaid state pension for 20 years

In July 2023, I acquired a DWP letter concerning my Dad’s state pension. He handed away in 2020 aged 100.

The letter advises he was entitled to extra pension than was paid for the interval May 2000 to October 2020. 

This would have been from the age of 80 to 100.

There was a consultant declaration to finish which I did and I’ve since tried to name them to seek out out if he’s eligible. 

They are unable to advise because the part coping with this don’t take calls.

He didn’t obtain a state pension as a result of not having paid sufficient NI contributions as a self-employed enterprise proprietor. 

He acquired a cost on the finish of the yr which was about £10. Are you capable of assist?

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Steve Webb replies: It should have come as a shock to you to get a letter from the Government telling you that your late father was underpaid state pension for the final 20 years of his life.

And it is rather regarding that regardless of you responding to the letter nothing has occurred since.

The background to the letter that you’ve got acquired is the widespread set of errors in state pensions which This is Money and I unearthed.

The three teams affected by these errors embrace:

– Married ladies on a low state pension, whose husband drew his pension after 17 March 2008, and whose pension ought to have been mechanically elevated when he retired;

– Widows, whose state pension was not reassessed when their husband died; some widowers had been additionally affected;

– People on a low pension, whose pension ought to have been elevated mechanically to the usual over-80s price after they turned 80;

Since early 2021, DWP have been using a whole lot of civil servants to undergo a whole lot of 1000’s of information to examine for errors and to pay arrears – this is named the Legal Entitlement and Administrative Practice or LEAP train.

The newest official figures on state pension underpayment circumstances reviewed to 31 October 2023 present that by then they’d paid out slightly below half a billion kilos to greater than 80,000 folks.

DWP say that by the top of 2023 they’d completed checking for errors on married ladies and the over-80s and can spend the remainder of 2024 resolving errors referring to widows and widowers.

Given that DWP regards errors for the over-80s as now resolved, it was a shock to get your message and to listen to that you simply had nonetheless not had the related cost from DWP to your late father.

In case that is related to anybody else, the particular error we’re speaking about right here pertains to one thing known as the Category D state pension.

This is payable at a price of roughly 60 per cent of the complete fundamental state pension for these aged 80 or over. The present price is £93.60 per week.

The uncommon function of the Category D pension is that it’s payable no matter your file of National Insurance contributions.

This is why somebody akin to your late father, whose NI file might have been patchy due to his time working a small enterprise, would nonetheless be entitled.

This is Money contacted DWP in your behalf and so they confirmed that your father was certainly underpaid for 20 years, and have issued you with an arrears cost of slightly underneath £8,000. 

They have additionally apologised for the delay.

Eagle-eyed readers might have a look at this arrears determine and surprise why it’s not bigger provided that the underpayment went on for 20 years.

The purpose for that is that you’ve got informed me that your dad and mom had been receiving pension credit score to high up their revenue.

If the right state pension had been paid on time then their pension credit score cost would have been decrease.

So DWP offset the underpaid state pension in opposition to what now seems to have been overpaid pension credit score and pay you the distinction.

Logically folks underpaid state pension or their beneficiaries ought to get curiosity. But DWP took the choice proper initially of the LEAP train that they’d not pay curiosity, and say they’ve precedent for this.

I believe their view is that it’s sufficient of a job to examine a whole lot of 1000’s of information, calculate redress and make all of the funds, with out then having to do complicated curiosity calculations on high which might gradual the entire thing down.

I think about if somebody challenged this in court docket they could properly win, however the quantities concerned at normal authorities rates of interest would most likely be small relative to the price of doing so.

Your expertise does make me surprise what number of extra folks there are who might have been contacted about errors – maybe particularly referring to a cherished one who has since died – however have heard no extra.

If you might be on this place do please get in contact as we wish to ensure that as many individuals as doable get the cash that they’re owed. Details of how one can write to are within the field above.

Do you need to pay tax on a cost of state pension arrears?

The lump sum is a cost of state pension, and state pensions rely as taxable revenue, so there could also be revenue tax due.

But the excellent news is that you’re not taxed as should you had acquired the cash this yr multi functional large lump.

The means the tax invoice is labored out is that the lump sum is damaged down right into a year-by-year quantity.

You are then taxed as should you had acquired the right cost every year. However, no tax is due for intervals greater than 4 full tax years again.

In follow, for somebody who was on a really low revenue, and who wouldn’t have been drawn into the tax web even when they’d acquired their appropriate pension, then there will probably be no tax invoice.

Where a cost is made to the property of somebody who has died there might in a minority of circumstances even be a problem round inheritance tax.

This level is roofed by my colleague Heather Rogers at This is Money in her article right here: What are the tax guidelines should you inherit a state pension backpayment?

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