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Home UK State pension system 'not fit for purpose', warn MPs

State pension system ‘not fit for purpose’, warn MPs

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The Government has failed pensioners and will leave thousands of married women out of pocket, despite its attempts to correct its own mistakes.

A scathing report from Westminster’s Public Accounts Committee warned the state pension has been “unfit for purpose” for decades. It said plans to reimburse more than 134,000 women who were underpaid more than £1bn have been a “shameful shambles”. 

Millions of pensioner records are kept on an IT system that dates back to 1988 and is “intrinsically vulnerable” to errors, according to the MPs on the committee. 

The mistakes affect pensioners who first claimed state pension before April 2016 and who do not have a full National Insurance record. Many citizens were and continue to be underpaid their state pension. In one case a retiree was underpaid from 1985 to 2021.

Dame Meg Hillier, MP and chair of the Public Accounts Committee said taxpayers were “paying in spades” because the Department for Work and Pensions relied on a “clunky” pensions system. More than 500 staff have been recruited to rectify the error, at a cost of £24.3m, funded by taxpayers.

“In reality the DWP can never make up what people have actually lost, over decades, and in many cases it’s not even trying,” she said.

Those who were forced to get by on a reduced stipend for years may still be out of pocket, even after the Government reimburses them, the report warned. This is because lump sum payments of arrears could affect pensioners’ current or future entitlement to other benefits, including pension credit, social care or housing benefit. 

But the DWP has shown “little interest” in accounting for these financial consequences, the report said. “The department is unlikely to be restoring the pensioners to a position as if the issue never occurred, as would be expected according to the principles of managing public money,” it said.

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