Millions of people have been on the wrong pension for years, with 23% of pensioners being underpaid, the BBC has found. The government has been aware of the problem since the 1990s.
The Department for Work and Pensions (DWP) told the BBC it was “investigating possible remedies”. The BBC reports that 17% of people are overpaid, with some people being both underpaid and overpaid in different years.
The DWO decided in 2002 that it would be too complicated to solve the problem.
Sir Steve Webb, who served as pensions minister between 2010 and 2015, told the BBC: “The scale of these mistakes is truly mind-boggling.”
He added: ‘It beggars belief to hear that a government department could just decide it was okay to pay the wrong pension rate for decades, but don’t feel compelled to tell Parliament or to the public.
“If the DWP has sat on this secret for decades, one wonders how much else has just been glossed over.”
The pension strategy computer system built by the government in the 1980s is unable to accurately calculate one element of the state pension – the Graduated Retirement Benefit, reports the BBC.
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.
In a statement, the Department for Work and Pensions said the errors were “several decades old” and “successive governments have failed to correct this”.
“A decision was made in 2002 not to make any changes or corrections in view of the complexity of the system and its minimal impact on individuals, until a new computer system was introduced. The Department is evaluating the magnitude of this problem and is exploring possible solutions,” a spokesperson said.