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£10,000 State Pension Boost: 5 Essential Steps To Claim Your Lump Sum Underpayment (Updated 2025)

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The Department for Work and Pensions (DWP) is currently undertaking a massive correction exercise to address historical State Pension underpayments, a process that has already paid out over £800 million to pensioners. This unprecedented effort, which involves reviewing hundreds of thousands of cases, is set to deliver a significant financial boost—often a lump sum of thousands of pounds—to a specific group of retirees, primarily women who reached pension age before the New State Pension system was introduced in April 2016. The latest figures, up to March 2025, confirm that more than 130,000 underpayments have been identified, with the average payout hovering around £9,000 to £10,000, making this one of the most critical financial updates for older Britons in recent history.

This "state pension boost" is not a general increase but a rectification of errors that have spanned decades, affecting specific entitlements related to a spouse's National Insurance contributions. The issue, which was brought to light by independent financial experts, has led to a formal, large-scale review known as the Legal Entitlement and Administrative Practices (LERR) exercise. If you are a married woman, a widow, or over the age of 80, understanding the details of this correction is vital to ensure you receive the money you are legally owed.

The DWP State Pension Underpayments: Who is Owed a Lump Sum?

The root of the underpayment issue lies in the complexity of the "old" Basic State Pension (BSP) system, which applied to anyone who reached State Pension Age (SPA) before 6 April 2016. Under this system, certain groups of pensioners were entitled to have their pension automatically increased based on their husband’s or late husband’s National Insurance (NI) record, but these increases were not always applied correctly by the DWP’s legacy IT systems.

The DWP's correction exercise is specifically focused on three main categories of pensioners who may be entitled to a significant lump sum repayment and a permanent increase in their weekly pension payments. These groups are the primary beneficiaries of this unexpected financial boost, with some individual payouts exceeding £33,000.

  • Married Women (Category BL): Women who reached SPA before April 2016 and whose Basic State Pension (BSP) did not automatically increase to the 60% rate of their husband's BSP when he retired. Many of these women should have been receiving a pension boost equivalent to 60% of the husband’s full basic rate.
  • Widows and Widowers (Category B): Individuals whose State Pension did not increase following the death of their spouse, where they should have inherited an entitlement based on their late spouse’s NI record. This includes people who were receiving a low pension while their spouse was alive, but their entitlement was not reviewed and updated correctly upon bereavement.
  • The Over-80s (Category D): Pensioners who are over 80 years old and are receiving a Basic State Pension of less than £85.00 per week (the current over-80 rate), and who may not have had their pension automatically uplifted to this minimum amount.

The total number of cases reviewed by the DWP between January 2021 and March 2025 stands at 877,508, leading to the identification of 130,948 underpayments. The total amount repaid has now surpassed £804.7 million.

The Average Payout and How the Correction Exercise Works

For those identified as underpaid, the financial impact is substantial. The lump sum repayment covers the arrears—the money that should have been paid weekly—from the date the underpayment began up to the present. The latest data reveals that the average lump sum payment to those affected is approximately £9,000 to £10,000. This figure varies significantly, however, with some receiving smaller amounts and others, particularly those with long-standing errors, receiving tens of thousands of pounds.

The DWP has committed to completing the correction exercise, known as the LERR exercise, with a target completion date. Due to the complexity of the legacy IT systems and the sheer volume of records, the process is being rolled out in phases. The DWP's analysts are working to identify and contact all affected pensioners, meaning most people do not need to take action initially.

Three Phases of the DWP Correction Exercise

The process is structured to systematically address the most vulnerable groups first:

  1. Phase 1: Category D (Over-80s): This group is a priority because of their age and the clear entitlement to a minimum pension rate.
  2. Phase 2: Category BL (Married Women): This is the largest group, covering women who should have received an uplift based on their husband's NI contributions.
  3. Phase 3: Category B (Widows/Widowers): This phase addresses errors where the surviving spouse did not inherit the correct State Pension entitlement.

The DWP is using its internal records and National Insurance data to automatically trigger the review. Once an underpayment is confirmed, the pensioner is contacted and the lump sum arrears are paid, along with an adjustment to their ongoing weekly State Pension amount.

5 Essential Steps to Check Your State Pension Entitlement

While the DWP is working through its lists, experts like Lane Clark & Peacock (LCP) strongly advise those who believe they might be affected to proactively check their pension. Waiting for the DWP to contact you could mean months or even years of receiving an underpaid weekly amount. The following steps can help you determine if you are owed a significant financial boost.

  1. Check Your State Pension Age: You are likely affected if you reached State Pension Age before 6 April 2016. If you reached SPA after this date, you are on the New State Pension, which is generally not affected by these specific errors.
  2. Review Your Current Weekly Payment: If you are a married woman and your current Basic State Pension (BSP) is less than 60% of the full basic rate (currently £169.50 per week for 2024/25, rising to £177.06 for 2025/26), you might be entitled to an uplift. For the 2024/25 tax year, 60% of the BSP is £101.70.
  3. Call the DWP's Dedicated Helpline: The most direct way to check is to contact the DWP's State Pension Future Service Centre. Be prepared to provide your National Insurance number and details of your spouse (if applicable).
  4. Check Your Spouse's NI Record: If you are a married woman, your entitlement is linked to your husband's National Insurance record. If he has a full record, you should be receiving a pension based on his contributions, up to the 60% rate.
  5. Seek Independent Advice: Organisations like Age UK or independent financial advisers (IFAs) can offer clarity. Financial experts, such as those at MoneySavingExpert, have highlighted the issue extensively and provide resources to help you calculate your potential arrears.

Receiving this lump sum repayment may have implications for other benefits or tax obligations, so it is advisable to seek guidance on how the large payment might affect your overall financial situation. This significant correction effort underscores the importance of regularly reviewing your State Pension statement and understanding your full entitlement, especially for those who retired under the older, more complex system.

£10,000 State Pension Boost: 5 Essential Steps to Claim Your Lump Sum Underpayment (Updated 2025)
state pension boost for 400000 people
state pension boost for 400000 people

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