THE Department for Work and Pensions (DWP) has issued a major update on the thousands of women affected by a state pension blunder.

Fresh figures show that almost 120,000 women have been short-changed on their state pensions and are owed up to £11,905 each.

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The DWP has been undertaking a correction exercise since 2021 to fix these errors.

This blunder affected married women whose husbands reached pension age before 2008, as well as widows and women over 80.

They were entitled to an ‘enhanced pension‘, which could have boosted their payments by up to 60%, but they didn’t receive it at the time.

Your husband must have turned 65 before March 17, 2008 to qualify.

The DWP has now completed payouts to married women and those over 80.

They’ve paid £250.6million to 45,907 married women, with an average payout of £5,591.

Women over 80 have received £68.2million across 33,437 cases, with an average of £2,202 each.

As of November 2024, the DWP is still issuing payments to widows affected by the issue.

So far, £417.2million has been paid to 39,706 widows, with an average of £11,905 each.

It means that in total, 119,050 women are owed up to £11,905 each from the DWP.

The DWP added that it expects to issue payments owed to all remaining widows by the end of 2024.

However, this isn’t the only type of state pension underpayment blunder affecting retirees.

Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “The number of people who have been underpaid their state pension is shocking. 

“And this isn’t the final number either, because the DWP hasn’t finished uncovering the full extent of underpayments yet.

“The government is still carrying out a review, going through everyone who might have been underpaid, so you don’t need to apply to be part of this process.”

The DWP will contact you directly if you’re affected by the error.

You must respond to any communications to ensure you receive a repayment.

UPDATE ON OTHER ERRORS

The government has also shared progress on correcting Home Responsibilities Protection (HRP) errors.

From January 8 to September 30, 2024, the DWP identified 5,344 cases of underpayment, amounting to around £42million in total arrears.

This issue affected individuals who took time off work to care for children or someone with a disability between 1978 and 2010.

The problem arose because child benefit claim forms submitted before 2000 often didn’t include a National Insurance number, meaning the relevant HRP information wasn’t transferred from the child benefit system to the National Insurance system.

HRP would have added credits that counted towards their state pension, much like National Insurance credits work today.

As a result, thousands missed out on state pension benefits worth an average of £5,000.

If you have missing payments, you can complete a CF411 form to add the credits to your record.

You might also be eligible to apply if any of the following situations apply to you:

• You were caring for a child while your partner claimed child benefit instead of you.
• You were receiving Income Support because you were caring for someone who was sick or disabled.
• You were caring for a sick or disabled person who was claiming certain benefits.

If your partner claimed child benefit, you might be able to transfer the HRP credits, but they will need to agree.

For example, if you were a stay-at-home parent and your working partner claimed the child benefit, they can transfer the credits to you.

Your payments will be recalculated if you have missing HRP credits and have already reached state pension age.

Any missing money will be backdated and paid to you as a lump sum.

An expert recently revealed that more pensioners could be owed cash but have been unable to claim.

TRACK DOWN ERRORS

LCP has developed an online tool to help people understand what state pension they are entitled to inherit on top of their own state pension at go.lcp.com/inheritingstatepension.

A tool previously launched by the company to help married women check for underpayments had over one million visits.

The DWP also has a tool to help those receiving the new state pension assess their eligibility for inherited state pension amounts at gov.uk/state-pension-through-partner.

There is also a guide on inheriting or increasing a state pension at gov.uk/new-state-pension/inheriting-or-increasing-state-pension-from-a-spouse-or-civil-partner.

A DWP spokesperson said: “We want to ensure pensioners receive all the support to which they are entitled and have a tool to help them understand what state pension they can inherit.

“Delays can occur to a customer state pension award when not all the information we need is provided.

“In these cases, we will make a state pension award based on the customer’s own national insurance record until we have the required information.

“Once we have the necessary documentation, we will then revise the customer’s claim as soon as possible.”

Firms seeking to operate commercial pensions dashboards services (PDS) have no timescale when this will happen despite the Financial Conduct Authority publishing rules they must follow when designing and operating them.

FCA set out rules for pensions dashboards service firms in a policy statement published yesterday (7 Nov.)

They include expectations that firms will act “fairly, honestly and professionally in consumers’ best interests and deliver good consumer outcomes consistent with the Consumer Duty”.

And that the service firms offer “must be fit for purpose and help consumers make effective choices and act in their own interests”.

The FCA stressed that it wants PDS to be platforms where consumers can “confidently and positively engage with their pensions and be safely supported in retirement planning.”

It added that the rules, which were considered following consultations with stakeholders, are “proportionate” for the first iteration of commercial pensions dashboards.

However, FCA failed to give a timescale when firms will be able to operate pensions dashboards services.

Rachel Vahey, head of public policy at AJ Bell, said the lack of timescale is a “huge let down for customers”.

She said: “This statement is helpful but leaves the pensions industry with only a set of rules and no definitive timescale for when commercial dashboards will become a reality. Setting a clear date for commercial dashboards would allow providers to start planning in earnest. The development of dashboards has already been a bumpy ride with numerous stops and starts, and changes in who is responsible for getting it over the starting line.”

Earlier this year, the government changed the law to bring the new activity of operating a pension dashboard service within the FCA’s regulatory remit.

This legislative change means that a firm wishing to operate a PDS must become FCA authorised, get permission to undertake the new regulated activity and meet its requirements for firms undertaking this activity.

Last month Emma Reynolds, the pensions minister, confirmed that initially people will only be able to access their information by going through the Pensions Dashboard run by the government’s Money and Pension Service (MaPS).

THOUSANDS of parents are paying more than they need to for baby milk because of a lack of competition in the market, a government watchdog has warned.

At the moment there are two dominant baby formula companies – Danone and Nestle – who make up 85% of all sales.

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As a result, there is little incentive for these manufacturers to compete to offer the best price, the Competition and Markets Authority (CMA) warned.

The news comes after the boss of Iceland Richard Walker last year hit out at “exploitation” of new parents and called for action to be taken in the industry.

Over the past few years it has become more expensive to manufacture infant formula and these costs have been passed on directly to customers.

Parents often choose baby formula for the first time when they are in vulnerable situations such as in hospital straight after birth.

Often they make the choice when they do not have access to clear, accurate and impartial information, the watchdog warned.

Parents are also often under a lot of pressure to do what is best for their baby.

As a result, they can often choose a more expensive product as they assume that a higher price will mean it is better quality.

This is not true as the NHS advises that “it does not matter what brand you choose, they’ll all meet your baby’s nutritional needs, regardless of price”.

Parents also often listen to advice from friends and family when choosing a formula, which means the brand’s reputation plays a much larger role in the decision making.

Sarah Cardell, chief executive of the CMA, said it is concerned that companies “don’t compete strongly on price”.

She added: “We have identified options for change, but now want to work closely with governments in all parts of the UK, as well as other stakeholders, as we develop our final recommendations.”

The CMA has set out several potential options which could help to improve the industry and reduce the cost for parents.

It wants to provide new parents with clear, accurate and impartial information, for example in hospitals.

The CMA may also allow companies to publicise their prices and price reductions, which they are currently not allowed to do.

It also wants to strengthen labelling and advertising rules as branding is a large part of the reason that parents choose a certain product.

This could be done by requiring manufacturers to use entirely different branding for their infant and follow-on formula.

The CMA may also implement stricter rules around certain messages on packaging.

In the long term the government may also be forced to take more significant action to bring down costs, such as introducing price caps.

The CMA will publish a final report on baby formula in February 2025.

What help is there for parents?

If you receive certain benefits and are pregnant or have at least one child under the age of four then you can apply for Healthy Start vouchers.

You will get:

• £4.25 each week of your pregnancy
• £8.50 each week for children from birth to one year old
• £4.25 each week for children between one and four years old

The money will stop after your child’s fourth birthday or if you no longer receive benefits.

If you are eligible you will be sent a Healthy Start card with money on it that you can use in some UK shops.

The money will be added onto this card every four weeks.

You can use the card to buy:

• Plain liquid cow’s milk
• Fresh, frozen and tinned fruit and vegetables
• Fresh, dried and tinned pulses
• Infant formula milk based on cow’s milk

To be eligible for the scheme you must be receiving one of the following benefits:

• Income support
• Income-based jobseeker’s allowance
• Child tax credit if your family’s annual income is £16,190 or less, and not getting working tax credit
• Universal credit if your family’s monthly earned income is £408 or less from employment
• Pension credit

You can apply for the scheme on the NHS website.

Do you have a money problem that needs sorting? Get in touch by emailing money-sm@news.co.uk.

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Good morning and welcome to your Morning Briefing for Friday 8 November 2024. To get this in your inbox every morning click here.

Firms in the dark on commercial pensions dashboards delivery date

Firms seeking to operate commercial pensions dashboards services (PDS) have no timescale when this will happen despite the Financial Conduct Authority publishing rules they must follow when designing and operating them.

FCA set out rules for pensions dashboards service firms in a policy statement published yesterday (7 Nov.)

Rachel Vahey, head of public policy at AJ Bell, said the lack of timescale is a “huge let down for customers”.

Closing the advice gap

How do we close the advice gap?

That’s the million-dollar question I’ve heard debated time and again since I joined Money Marketing.

The consensus is that artificial intelligence and the introduction of new technology will free up advisers’ time and enable them to take on and serve more clients.

But could it be the banks that hold the key to closing the gap?

Quote Of The Day

There are some more bullish voices out there, including Goldman Sachs who have forecast UK base rate to fall to just 2.75% by next Autumn. The fact the decision to cut rates was almost unanimous will put some powder in this argument.

-Laith Khalaf, head of investment analysis at AJ Bell, comments on latest interest rate decision from the Bank of England.

In Other News

The Pension Protection Fund (PPF) has published its fifth Responsible Investment report, which reinforces its commitment to promoting sustainability in the pensions industry and demonstrates the power industry engagement and collaboration across its asset managers, portfolio companies, industry bodies and peers has had over the last 12 months.

The annual report summarises the stewardship and governance activities carried out by the PPF that have not only driven greater participation and engagement industry wide, but also have improved reporting, risk analysis, transparency and driving positive change.

Barry Kenneth, chief investment officer at the PPF said: “The last 12 months has been a period of evolution and engagement, and this report outlines our continued commitment to align with the Stewardship Code, showcasing the steps we have taken and measures we have advanced to protect and drive value across our portfolio.

Isio, a provider of pensions and employee benefits consultancy, has announced the launch of its new individual service designed to streamline support for NHS employees affected by the McCloud pensions tax roll-back.

The McCloud remedy addresses age discrimination in the 2015 public service pension reforms. It involves rolling back the 2015 scheme benefits into the previous final salary schemes for affected public sector members.

But many senior NHS staff will have to also revisit up to seven years of self-assessment tax forms by 31 January 2025 (or 3 months after being notified if later).

The new service will help these NHS Pension Scheme members, who will receive a Remediable Pension Savings Statement (RPSS), to collect the required data and submit it to HMRC.

Isio’s service manages the entire process, allowing members to easily claim tax refunds where appropriate (and in some cases pay additional tax charges). The service is to be also available for senior police employees affected by the same issue.

Did You See?

Greg Neall, chartered financial planner at Wake Up Your Wealth, chides journalists, experts, and commentators over their “scaremongering” articles in the lead up to the autumn Budget.

He writes: It’s impossible to count the number of headlines written over the last few months declaring the 25% tax-free pension lump sum was in danger of being scrapped in last week’s Budget to boost clicks and comments.

Anyone with a working brain and the slightest bit of political nous could see there was no way the chancellor would do something so politically suicidal, especially after the Winter Fuel Allowance fiasco. Shame on those claiming it was ever likely.

There was also a glut of poorly-researched pieces on how the lump sum allowance might come down to £100,000.

Read the full article here.

THOUSANDS of hard-up households could get £115 free cash paid directly into their bank accounts before Christmas.

Struggling households can claim the money through the government’s Household Support Fund (HSF) now.

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The HSF was extended for the sixth time from October 1, meaning households can claim help from a fresh £421million pot of funding.

Councils across the country have received a portion of the cash to distribute to those in need.

But there is a postcode lottery to determine who qualifies as each local authority can set its own eligibility criteria.

Despite this if you have a limited amount of money or savings in the bank, or are deemed to be vulnerable or on benefits, you will probably qualify for help.

Money will either be given to you as a direct cash transfer, shopping vouchers, energy support or in another form.

The amount handed out varies and the local council will determine this.

In York people of working age who receive Council Tax Support can apply to receive a payment of £115 directly into their bank account.

Those eligible for the payment will receive a letter this month with the instructions to register.

Those who need assistance with food, energy or water bills who do not receive Council Tax Support or are over pension age can also apply for a discretionary payment.

If you apply for a discretionary payment you will need to complete a means-tested assessment including personal financial information.

If you don’t live in York you should check with your local authority to see what support it is offering.

Rotherham Council is now offering struggling families £250 grants to fight the cost-of-living increase.

Those living in Birmingham can claim £200 to help with soaring winter energy payments.

Meanwhile, Wakefield Council is offering support to pensioners who will miss out on the winter fuel payment this year.

What is the Household Support Fund?

The Household Support Fund was introduced in October 2021 by The Department for Work and Pensions (DWP) to support households most in need.

The funding is distributed between councils, and they are then responsible for dishing out the cash on an application basis.

For example, Birmingham City Council have announced they will hand out free £200 cost of living payments to help its residents cope this winter, as one of its approaches to the fresh fund.

How do I apply?

In order to be eligible for help, you may have to be in receipt of benefits or provide proof of being in financial difficulty.

Each council has a different application process – so you’ll have to ask your local authority or find out via your council’s website.

Not all councils have decided how they will distribute the cash yet, so you may have to wait to get all the information.

To find out how to contact your local authority, use the gov.uk authority tool checker.

In the last round of funding, some residents received their share automatically, while others had to apply.

For example, Haringey London Council is issuing automatic payments to eligible residents, as well as a support fund which can be applied to.

It is also issuing payments to schools, which means they can distribute free school vouchers.

In previous years, other authorities have offered cost of living vouchers – such as Coventry City Council.

This has included a Community Supermarket scheme, where all Coventry residents could pay £5 weekly and receive a basket of food worth up to £25.

Residents of Effingham, near Guildford, have been able to claim up to £300 free cash to help with the cost of living crisis.

Surrey council previously poured £300,000 into food banks, where photo ID and proof of address is required, but no referral needed.

While some schemes, such as the Surrey Crisis Fund, which can offer up to £100 to those immediately in need, are reserved for those who also rely on other means-tested benefits.

How has the Household Support Fund evolved?

The Household Support Fund was first launched in October 2021 to help Brits pay their way through winter amid the cost of living crisis.

Councils up and down the country got a slice of the £421million funding available to dish out to Brits in need.

It was then extended in the 2022 Spring Budget and for a second time in October 2022 to help those on the lowest incomes with the rising cost of living.

The DWP then confirmed a third extension of the scheme through to March 31, 2024.

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Former chancellor Jeremy Hunt extended the HSF for the fourth time while delivering his Spring Budget on March 6, 2024.

In September 2024, the Government announced a fifth extension.

Do you have a money problem that needs sorting? Get in touch by emailing money-sm@news.co.uk.

Plus, you can join our Sun Money Chats and Tips Facebook group to share your tips and stories

How do we close the advice gap?

That’s the million-dollar question I’ve heard debated time and again since I joined Money Marketing.

The consensus is that artificial intelligence and the introduction of new technology will free up advisers’ time and enable them to take on and serve more clients.

But could it be the banks that hold the key to closing the gap?

After the Retail Distribution Review was introduced in 2012, most UK banks stopped offering financial advice to all but their wealthiest clients. This was mainly due to the higher risks and costs now involved.

If this means that more people can get access to financial advice, it’s not necessarily a bad thing, says Ball

Their departure created a big opportunity for Hargreaves Lansdown, St James’s Place and other wealth managers. But the tide could now be turning.

In August, HSBC announced plans to double its assets under management to £100bn and become one of the top-five wealth managers in the UK in the next five years.

“In order to fulfil this vision, we are growing our national team of wealth advisers and relationship managers at scale,” it said.

But it’s not just HSBC. Barclays and Lloyds have also made moves back into wealth management. And, according to two experts, that can only be a good thing.

Mass-affluent market

Many advice firms no longer touch anyone with less than £250,000 in assets because it is not profitable for them to do so.

So, could banks help solve the problem? Hoxton Wealth chief executive Chris Ball believes so.

We should embrace the banks with open arms if we really want to close the advice gap

“These banks are focusing on the ‘mass affluent’ market — as in people with £75,000 to £250,000 in deposits,” he says. “There’s a massive opportunity here, because this group of clients need advice nearly as much as the ultra-high-net-worth individuals do.”

NextWealth managing director Heather Hopkins agrees.

“NextWealth research shows that the average portfolio size for financial advice firms is over £400,000. There is a huge, untapped market out there,” she says.

“One of the challenges we face as a nation is that people don’t seek out advice. The more firms that shout about the value and availability of advice, the more people will seek it out.”

The resurgence of the banks may put some wealth managers’ noses out of joint, but Hopkins says they needn’t worry.

Many advice firms no longer touch anyone with less than £250,000 in assets

“Demand for advice far outstrips supply, so I don’t see banks competing with traditional wealth managers.”

Ball agrees that banks do not pose a threat.

“If it means that more people can get access to financial advice because the banks make it cheaper to do so, I don’t necessarily see that as a bad thing.

“As a profession, we should really focus on the positives of what we are doing and not the negatives of what the banks are doing.”

Independence

Ball thinks the banks will have tied products, and “a lot of it will be around product sales rather than giving proper, holistic financial planning”.

The resurgence of the banks may put some wealth managers’ noses out of joint, but Hopkins says they needn’t worry

Therefore, his message to wealth managers is simple: “Keep doing what you’re doing — giving great, independent financial advice. That independence bit, I think, will be key.”

The Lang Cat consulting director Mike Barrett agrees.

“For these types of services, advice is rarely the product. It’s about the banks wanting to sell more of their own funds.

“As a consequence, the vast majority of the advice profession should have nothing to fear from these offerings.”

When I spoke to the FCA’s Nick Hulme, head of advisers, wealth and pensions, he told me the regulator was open to banks entering the sector.

“Financial advisers can do their bit — they are already active in the market and very knowledgeable.

It’s not just HSBC — Barclays and Lloyds have also made moves back into wealth management

“If there are other players that are going to come in to help reduce that advice gap, which this country really needs, then we’re agnostic to who that is.”

Hulme added that the regulator was “absolutely on board and behind anyone with the right intentions and motives”.

As for an old friend we haven’t seen for a while, we should embrace the banks with open arms if we really want to close the advice gap.

Dan Cooper is news editor

This article featured in the November 2024 edition of Money Marketing. 

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