Source · Select Committees · Public Accounts Committee
Recommendation 6
6
Accepted
The Department’s efforts to correct the systemic underpayment of State Pension are too slow to...
Recommendation
The Department’s efforts to correct the systemic underpayment of State Pension are too slow to meaningfully put things right. The Department now estimates that 237,000 pensioners have been underpaid a total of £1.46 billion in their State Pension. Despite these underpayments going back as far as 1985, the Department’s overall exercise to correct this issue is delayed from the end of 2023 to the end of 2024. The Department cannot be certain that its plan to deliver the exercise on schedule is achievable, as it is dependent on assumptions around recruitment, retraining, and automation. We are not convinced that the Department has done enough to ensure its communications to potentially affected pensioners are sufficiently clear. We are concerned that this may leave many pensioners lacking reassurance that they will receive meaningful and timely redress. The Department does not yet know the full extent of the underpayment relating to Home Responsibilities Protection, and it is dependent on HMRC to evaluate the impact of these underpayments on pensioners. The Department cannot be certain that it has identified all the underpayments implied by the results of its annual measurement exercise. Overall, we remain unconvinced that the Department’s control systems are adequate to detect further underpayments before they build up into major issues in future. Recommendations: As part of its Treasury Minute response, the Department should set out a credible plan to deliver the exercise to correct State Pension underpayments on schedule and explain how it will update its communications to reassure pensioners that they will be meaningfully compensated. In addition to this, the Department should: 8 The Department for Work and Pensions’ Accounts 2021–22 – Fraud and error in the benefits system • as part of its Treasury Minute response, work with HMRC to fully evaluate the extent of the HRP underpayment as soon as possible and provide a timetable of when it expects each phase of this p
Government Response Summary
The government agrees and states that work is underway in HMRC, supported by the department, to understand more about the scale, potential causes, and options to correct historical errors relating to Home Responsibilities Protection (HRP). They also mention a list of Treasury Minutes responses.
Government Response
Accepted
HM Government
Accepted
The government agrees with the Committee’s recommendation. the National Insurance records maintained by HMRC. Activity has been underway in HMRC closely supported by this department, to understand more about the scale, potential causes, and options to correct historical errors relating to Home Responsibilities Protection (HRP). Investigation activity is complex, involving matching Child Benefit claims to National Insurance records to identify customers who may be impacted. Estimates of the potential numbers of people affected and associated costs are still being finalised and are not yet available. HMRC and the department are planning on the basis that investigation work will continue for several months, allowing the impact on State Pension payments to be quantified and for the next steps for any required corrective activity to be shared during the first half of 2023. 6d. PAC recommendation: By the publication of its next Annual Report & Accounts, set out a plan and timetable for introducing a measure to report the total value of arrears payments that arise due to underpayments, and how it will review individual arrears payments to assess whether they are indicative of a systemic underpayment issue. The government agrees with the Committee’s recommendation. State Pension Underpayment exercise in each of its last two ARAs for 2020-21 and 2021-22. The department is required to report material values of liabilities in accordance with financial and accounting standards where a reliable estimate can be produced. It is the department’s intention to continue to fulfil this obligation for the duration of the State Pension LEAP exercise, and for any other corrective exercises which are of material value according to the financial and accounting standards. As part of its fraud and error measurement exercises an estimate of the level of underpayments in each of the measured benefits is produced each year. State Pension is now included amongst those measured benefits. The department is already considering, as part of work with the NAO, how it can introduce a mechanism for utilising data available to it to identify potential errors within the State Pension system, assess the associated risk and take appropriate corrective action. The result of this work should be available by Summer 2023. Treasury Minutes Archive1 Treasury Minutes are the government’s response to reports from the Committee of Public Accounts. Treasury Minutes are Command Papers laid in Parliament. Session 2022-23 Committee Recommendations: 175 Recommendations agreed: 157 (90%) Recommendations disagreed: 18 Publication Date PAC Reports Ref Number July 2022 Government response to PAC reports 1, 3 & 10 CP 722 August 2022 Government response to PAC reports 2, 4-8 CP 708 September 2022 Government response to PAC reports 9, 13-16 CP 745 November 2022 Government response to PAC reports 11, 12, 17 CP 755 December 2022 Government response to PAC reports 18-22 CP 774 January 2022 Government response to PAC reports 23-26 CP 781 Session 2021-22 Committee Recommendations: 362 Recommendations agreed: 333 (92%) Recommendations disagreed: 29 Publication Date PAC Reports Ref Number August 2021 Government response to PAC reports 1-6 CP 510 September 2021 Government response to PAC reports 8-11 CP 520 November 2021 Government response to PAC reports 7,13-16 (and TM2 BBC) CP 550 December 2021 Government response to PAC reports 12, 17-21 CP 583 January 2022 Government response to PAC reports 22-26 CP 603 February 2022 Government response to PAC reports 27-31 CP 631 April 2022 Government response to PAC reports 32-35 CP 649 April 2022 Government response to PAC reports 36-42 CP 667 July 2022 Government response to PAC reports 49-52 CP 722 Session 2019-21 Committee Recommendations: 233 Recommendations agreed: 208 (89%) Recommendations disagreed: 25 Publication Date PAC Reports Ref Number July 2020 Government responses to PAC reports 1-6 CP 270 September 2020 Government responses to PAC reports 7-13 CP 291 November 2020 Government responses to PAC reports 14-17 and 19 CP 316 January 2021 Government responses to PAC reports 18, 20-24 CP 363 February 2021 Government responses to PAC reports 25-29 CP 376 February 2021 Government responses to PAC reports 30-34 CP 389 March 2021 Government responses to PAC reports 35-39 CP 409 1 List of Treasury Minutes responses for Sessions 2010-15 are annexed in the government’s response to PAC Report 52 Publication Date PAC Reports Ref Number April 2021 Government responses to PAC reports 40- 44 CP 420 May 2021 Government responses to PAC reports 45-51 CP 434 June 2021 Government responses to PAC reports 52-56 CP 456 Session 2019 Committee Recommendations: 11 Recommendations agreed: 11 (100%) Recommendations disagreed: 0 Publication Date PAC Reports Ref Number January 2020 Government response to PAC report [112-119] 1 and 2 CP 210 Session 2017-19 Committee Recommendations: 747 Recommendations agreed: 675 (90%) Recommendations disagreed: 72 (10%