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The UK government is facing a compensation bill of up to £10.5bn after an Ombudsman on Thursday ruled it had mishandled state pension age rises affecting millions of women born in the 1950s.
In a rare step, the Parliamentary Service and Health Ombudsman has asked parliament to intervene to provide the “quickest route” to compensation for women who had “suffered injustice” because of the Department for Work and Pension’s maladministration.
The Ombudsman’s report, the result of a five-year investigation, found that thousands of women born between April 1950 and April 1955 “may have been affected” by DWP’s failure to inform them properly that the state pension age had changed.
“DWP has also failed to offer any apology or explanation for its failings and has indicated it will not compensate women affected by its failure,” said the report. It added: “The Department must do the right thing and it must be held to account for failure to do so.”
The Ombudsman estimated the compensation bill could be between £3.5bn and £10.5bn, although it added that it understood not all women affected by the change — estimated by a parliament committee to be as many as 3.8mn — “will have suffered injustice”.
“All parties owe it to the women affected to make a clear and unambiguous commitment to compensation,” said Angela Madden, chair of the group Women Against State Pension Inequality, which has been campaigning on behalf of those affected for more than seven years
“The Ombudsman has put the ball firmly in parliament’s court, and it is now for MPs to do justice to all the 3.6mn women affected.”
From the 1940s until April 2010, the UK’s state pension age (SPA) was 60 for women and 65 for men. In 1995 new legislation set out a timetable to increase women’s pension age gradually from 60 to 65 between 2010 and 2020 to make them equal.
In 2010 the Coalition government brought forward the deadline for the equalisation of the SPA to November 2018, about two years’ faster than originally scheduled. The same bill also raised the pension age for both men and women to 66.
The Ombudsman investigated complaints that the DWP had failed to provide accurate, adequate and timely information about areas of state pension reform since 1995.
In an interim report published in 2021, it found specific instances in 2005 and 2006 of the department “not acting properly or providing poor service”.
In January 2022 the All Party Parliamentary Group on State Pension Inequality for Women recommended compensation of £10,000 or more for those affected by the changes.
In its final report the Ombudsman recommended compensation of around £1,000 to £2,950 each for those affected for “a significant and/or lasting injustice that has, to some extent, affected someone’s ability to live a relatively normal life”.
“DWP’s handling of the changes meant some women lost opportunities to make informed decisions about their finances. It diminished their sense of personal autonomy and financial control,” it added.
Downing Street said that the government would consider the report and respond in due course, but added that the prime minister had supported pensioners by committing to the triple lock.
The DWP said it had “co-operated fully throughout this investigation” and that the government was committed to supporting all pensioners in a sustainable way to give them a dignified retirement.
“The State Pension is the foundation of income in retirement and will remain so as we deliver a further 8.5 per cent rise in April which will increase the state pension for 12mn pensioners by £900,” it added.