Millions of retirees may have been underpaid pension for YEARS – are you owed thousands? | The Sun

MILLIONS of retirees may have been underpaid their pension for YEARS.

It's thought the errors have cropped up because of government IT failures.

Reports suggest that the errors are typically small, and are a mix of under-payments and over-payments.

Still, large numbers of people may be affected. 

It mainly affects widows, divorcees and women who rely on their husband's pension contributions for some of their pension entitlement, says the BBC.

On average, those who may have missed out will have received an underpayment of around £8,900.

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It's all because the Pension Strategy Computer System couldn't accurately uprate an element of the State Pension called the Graduated Retirement Benefit.

The ageing computer system was introduced back in the 1980s and was due to be shut down in 2020, but has been kept going on a temporary basis.

Yet just last year, the National Audit Office found that problems with the system had led to thousands of people not receiving their full entitlement of state pension.

As many as 134,000 people who had claimed the benefit before April 2016 were thought to be affected.

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More could find they had been underpaid around the same time, and experts aren't convinced it's an issue that should be overlooked.

Chris Eastwood, Co-CEO at pension giant, Penfold, said: “These errors are concerning and incredibly alarming for the millions affected.

"But they are not altogether surprising given the nature of the technology still being used by the government and industry alike to manage pensions on behalf of the UK public."

"The damage these sorts of errors do to how pensions are perceived by the public, particularly as being unreliable and insecure, has an incredibly detrimental impact on UK savers to prioritise their pensions against other medium and long term saving products."

As a cost of living crisis squeezes households' wallets at an alarming rate, many will choose not to pay into their pot because they think it's better to keep the money for now.

Plenty may be tempted to pause their pension contributions to ease financial burdens brought on by the crisis – but it could hurt them further down the line.

Many employees have seen their take-home pay squeezed thanks to tax hikes and the onslaught of inflation.

And with rocketing bills waiting to be paid each month too – from hefty energy fees, to blown-up broadband costs – it's leaving households with less and less.

And if you chose to opt-out of the payments you might see your take-home pay rise a little – but it could mean you miss out on thousands later in life.

"At a time when it is more important than ever to prioritise saving for life after work, we need the UK public to trust the government and the wider pensions industry to keep their money safe and accurately deploy pension income when the time comes to retire,” said Chris.

The BBC reports a statement from the Department for Work and Pensions: "A decision was made in 2002 not to make changes or corrections given the system's complexity and minimal impact on individuals, until a new computer system was introduced.

"The Department is assessing the scale of this issue and investigating potential remedies."

But this latest IT problem comes on top of DWP admitting that it had underpaid thousands of people – mainly women – over a period of decades.

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The total amount underpaid was over £1 billion. 

Over 500 civil servants are to be employed to put this error right, and the correction of those errors is expected to take until the end of 2023.

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