Source · Select Committees · Public Accounts Committee
Recommendation 22
22
Since our evidence session Sir Steve Webb has also drawn our attention to a potential...
Conclusion
Since our evidence session Sir Steve Webb has also drawn our attention to a potential systemic error affecting divorced pensioners. The NAO report states that “the Department did not find any significant evidence that it had failed to properly process cases where a pensioner had notified it of their divorce”.58 However Sir Steve believes the scope of the correction exercise is too narrow and should be extended to included divorced people for the following reasons. He told us that in October 2021 the Department published figures which show that there are 720,000 divorced women on the old state pension system. Although a divorced woman could be entitled to up to a full basic pension of £137.60, 40,000 divorced women are on less than £82.45 per week, suggesting there could be many divorced women losing out. In his view the type of error which caused the underpayments occurs when there is a change of circumstances (husband retires, husband dies, pensioner turns 80) and no pension reassessment takes place; exactly the same issue can arise when someone phones up to report a divorce. He told us that in recent months he has identified several individual cases of divorced women who were being paid the wrong amount (or no pension at all) and in each case the Department has accepted that money is due and has paid substantial arrears.59 53 Q 4, Letter from Permanent Secretary of the Department for Work & Pensions to the Chair of the Committee of Public Accounts, dated 15 November 2021. 54 Q 132 55 Q 133; C&AG’s Report, para 4.3 56 Q 139 57 Qq 144–148 58 C&AG’s Report, para 3.7 59 Letter from Sir Steve Webb to the Chair of the Committee of Public Accounts, dated 7 Dec 2021 Underpayments of the State Pension 17
Government Response
Not Addressed
HM Government
Not Addressed
7.2 The department undertakes a yearly review of a randomly selected sample of benefit cases. In reviewing a recent sample of 1500 state pension cases, the department did not find official error specifically relating to divorce. In addition, the department conducted a check of 100 large value payments, which related to backdating of pension entitlement. None of these were due to official error regarding divorce. Going forward, the department will use sampling such as this to identify both customer and official error as part of its overall prevention and detection strategy. Should future sampling activity detect potential underpayments, then further work will be undertaken, similar to the exercise completed that led to the current LEAP exercise, to determine the scale of the issue and whether any further correction exercises are required. 7.3 The department’s approach has been reviewed by the Government Internal Audit Agency (GIAA) who are satisfied that the department has taken appropriate steps to consider the risk of systemic underpayments to divorced women and concur with the department’s conclusions that there is no evidence of systemic error due to missing action taken on notifications of divorce. 7.4 As a direct result of the lessons learned from the State Pensions Underpayments, the department has made enhancements to the Customer Account Management (CAM) system that is used to maintain customer records. This now enables system generated prompts that direct agents to take specific actions before a case can be closed, preventing the errors that were identified as part of the Legal Entitlements and Administrative Practice (LEAP) exercise. 7.5 As well as IT enhancements, complex work is directed into specialist areas for control and accuracy purposes. Revised work instructions have been issued to staff. Enhanced checking of this work is undertaken, targeting the new instructions to ensure compliance. Data matching rules have been developed as an additional layer of assurance.