DWP mistakenly overpays state pensions by £500million and Brits don’t have to pay it back

The Department for Work and Pensions (DWP) has overpaid £500million in state pensions to deceased people over the last five years.

According to official data, the benefits department overpaid £512million in state pension and pension credit payments since 2018-20 – with £159million of this paid last year. The Telegraph reports that the issue arises when the DWP isn’t promptly informed of a pensioner’s death, leading to continued payments. The DWP does receive death notifications from the General Register Office, but this process can be slow.

However, if this is the case and the money continues to be paid, families are not required to return the overpaid amounts as they are not legally obligated to do so. However, the DWP does write to the families of those who have died to request the money back, although again, this is optional.

There are two different types of state pensions paid for by the DWP. These are the "new style" state pension and the "old basic style" state pension. If you are a man and born on or after April 6, 1951, or a woman born on or after April 6, 1953, then you’ll claim the new state pension. Born before, you will get the old.

The full amount of the old state pension is currently worth £169.50 per week – rising to £76.28 in April. The new state pension comes to £221.20 per week if a claimant is eligible for the full amount. This is rising to £230.05 in April.

The figures show that £458million was overpaid in state pension and just £233m was recovered, leaving £225million outstanding. Another £54million was wrongly paid in pension credit and only £22million was recouped, with £32million lost.

The figures came to light following a Parliamentary Question asked by Reform MP Rupert Lowe. Speaking to The Telegraph, Lowe called on the system to be overhauled. He explained: "This is a shocking waste that underlines the contempt with which the Government treats taxpayers’ money. Why is it tolerated? Why is the return of this money not enforceable? This is wide open to fraud and abuse. It needs to be clamped down as part of a wider government effort to slash down on misspending. We must keep pushing for transparent data to uncover the true extent of the waste.”

In response to the Great Yarmouth MP's call for reform, DWP’s parliamentary under-secretary Andrew Western said: "Direct Payments made into an account after the death of a customer represent only around 0.1 per cent of total annual expenditure on pensions. Although these are treated as non-recoverable and are not enforceable by law, we can request the money back as a voluntary payment. So far, we have recovered around half of the overpayments to avoid this becoming a long-term cost to the taxpayer."

Under existing law, deaths in England and Wales have to be reported within five days of the individual passing away or a body being discovered, or eight days in Scotland. Despite this, a claimant's final state pension payment from the DWP often still includes payments based on days after they have died.

Commenting on the news, former pensions minister Steve Webb, now of LCP, said: “With pensions routinely paid four-weekly in arrears, it is common that part of any final payment will cover a period after the person has died, even if the family contact DWP promptly. With everything else that the family is dealing with, letters from DWP trying to recover overpayments are unwelcome and should only be sent out if there is a legal basis for them.” The DWP declined to comment.

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