Source · Select Committees · Public Accounts Committee
Recommendation 30
30
Accepted
The NAO reported that the Department cannot rule out that there may be further groups...
Recommendation
The NAO reported that the Department cannot rule out that there may be further groups of pensioners, as yet unidentified, that have been affected by a historic underpayment. It concluded that this was in large part because the Department had not set out plans to revise its control processes for State Pension cases to ensure that underpayments are detected and recorded at the point of payment.63 As part of our previous inquiry into the underpayment of State Pension we expressed concern that senior management was not focused on designing a data strategy that detects errors in a more systematic way. The Department previously acknowledged ”an inability to pick up patterns of underpayment, which had been going on for many years”, which caused detrimental impact on those underpaid.64 We therefore challenged the Department on why it seemed to keep finding more problems and more people affected who were not getting the money that they should have already received. It told us that it considered the fact it was continuing to identify issues such as HRP demonstrated that it was “looking hard enough” to find cases of underpayment.65
Government Response Summary
The government agrees and plans to report the total value of arrears payments that arise due to underpayments in its next Annual Report & Accounts, and how it will review individual arrears payments to assess whether they are indicative of a systemic underpayment issue. They will also work with the NAO to identify potential errors within the State Pension system, assess the associated risk and take appropriate corrective action.
Government Response
Accepted
HM Government
Accepted
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. 6.19 The government agrees with the Committee’s recommendation. Target implementation date: Summer 2023 6.20 The department has already published an estimate of the arrears due in relation to the 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. 6.21 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. 6.22 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.