In total, retirees missed out on £450million in state pension payments from the DWP last year, with the average underpayment being £5,770
New figures published by the Department for Work and Pensions (DWP) reveal state pensioners were underpaid by almost half a billion pounds in 2024/25.
Six in every hundred state pension claims were underpaid last year – up from five in one hundred in the previous year. In total, retirees missed out on £450million in state pension payments, with the average underpayment being £5,770.
One of the main reasons for underpayments was down to parents – mostly mothers – missing out on credits for time spent at home bringing up children.
The figures come despite the completion of a four-year-long “correction” exercise which saw the DWP pay out £800million in arrears to over 100,000 widows, married women and over 80s.
The DWP and HMRC are in the middle of contacting pensioners and people of working age who may be missing Home Responsibilities Protection (HRP) which is an old form of National Insurance credits.
HRP reduced the number of qualifying years you need on your National Insurance record to claim the state pension. It was claimed by parents and carers when they had to take time off work to look after children or other family members, and was replaced by National Insurance credits in 2010.
However, HMRC is now investigating after it was discovered that Child Benefit claim forms submitted before 2000 did not include a National Insurance number.
This means the correct level of HRP may not have been carried across correctly for thousands of people – so they may not be getting the correct amount of state pension.
Those who are affected are mainly stay-at-home mums who made a claim for Child Benefit between 1978 and 2000. New figures on progress with this exercise are due to be published next week.
New data released today also revealed the DWP has overpaid an extra £90million as a result of its own errors last year.
Sir Steve Webb, former pensions minister and partner at pension consultants LCP said: “It is astonishing that six in every hundred state pensioners are being underpaid. In some cases these underpayments have been going on for years and could amount to thousands of pounds.
“When people have worked hard all of their lives, they have a right to expect that their pension will be paid at the correct rate. Given how complex the system is, it can be hard for people to know if they are getting the right amount or not, so it is all the more important that the Government gets it right.
“You would have hoped that all of the recent correction exercises would have resulted in a falling rate of errors, so it is all the more shocking to see underpayment rates increasing.
“DWP need to redouble their efforts to track down these errors and fix them as a matter of urgency.”