Ombudsman investigates underpaid pensions for married women

12 November 2024

The Parliamentary and Health Service Ombudsman (PHSO) has launched an investigation into potential State Pension underpayments affecting thousands of married women, with some underpayments potentially dating back decades.

The investigation focuses on married women who reached pension age under the old State Pension system. These women missed out on an uplift due to a complex rule requiring a second application when their husbands retired.

Many women may not have received their full entitlements. This may have resulted in financial shortfalls which could add up to tens of thousands of pounds over time, leaving them at a disadvantage in retirement.

This investigation is unrelated to the Waspi State Pension equalisation issue. 

What went wrong?

Until March 2008, married women could claim a State Pension at 60 based solely on their National Insurance contributions. This amount was often low, especially for those who had taken time off to raise families.

Once their husbands retired, they were eligible for a 60% pension based on their husband’s contributions, but only if they reapplied after his retirement. Many women, unaware of this rule, assumed their pension rate would automatically adjust and missed out on the increase.

Women who later learned about the increase could only backdate their pension for a single year, leaving many with a lower pension for life.

Steve Webb, partner at the consultant firm LCP, which has campaigned to resolve the issue, described DWP systems prior to 2008 as ‘bizarre’ and ‘old-fashioned’. 

He said: “In my view these women fell victim to a fundamentally sexist and archaic system which relied largely on married men ticking boxes and passing on claim forms to their wives.

“The women I have spoken to are all intelligent people who do not ignore official correspondence and who would clearly have claimed their uplifted pension if they had realised a second claim was needed once their husband retired.”  

The investigation's outcome could lead to the government paying out hundreds of millions of pounds in backdated state pension payments, according to consultancy LCP.