Number Of Pensioners Hurt By DWP Legacy System Error Actually 165,000

The UK's government has upped its estimate of the number of people hit by a state pension underpayment related to errors caused by a complex mesh of legacy systems dating back to the 1980s.

In its annual report for 2022-23 [PDF], the Department for Work and Pensions said 165,000 pensioners were underpaid a total of £1.17 billion ($1.5 billion) due to these errors, although it said the final underpayment figure could range from £957 million ($1.22 billion) to £1.35 billion ($1.73 billion).

DWP initially estimated that around 132,000 pensioners had been underpaid some £1.0 billion ($1.28 billion) in a scandal that hit widowed women claiming benefits accrued by their deceased husbands.

The National Audit Office report [PDF] on the DWP accounts said the department had reviewed 263,000 (or 39 percent) of the 678,000 cases potentially affected. In its 2021-22 report, the DWP said the number of people affected might be as high as 237,000.

In its deep dive into the calamity in 2021, the NAO said the failure to pay people the money owed was partly down to case workers having to review data from three separate systems, one of which dates from the 1980s.

"Pension caseworkers must review information across at least three systems, understand which of the State Pension rules apply to each claim, and then accurately interpret them in order to assess a pensioner's eligibility. These rules are only fully understood by a small group of specialists," the NAO said.

The DWP introduced the Pension Service Computer System in 1988 before the system was fully rolled out in July 1991. It was said to be one of the first Virtual Machine Environment (VME) mainframe computers to be installed by central government, supplied by ICL Limited, which was later bought by Fujitsu.

In January 2022, Parliament's spending watchdog said caseworkers needed to use the PSCS and three other IT systems in order to access all relevant pensioner details.

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The Department told the Public Accounts Committee "it is resistant to upgrading the State Pension 'workhorse' system because 'the process of doing that is incredibly complex and very risky from a business point of view'."

In its latest annual report, the DWP said: "The department has continued to invest in modernising our IT infrastructure and phasing out our legacy systems to enable delivery of reliable, secure, and cost-effective services which are essential to the 22 million claimants that the department serves."

It said it had also implemented a "Legacy Bridge" to reduce fraud and official error. "Leveraging data held in legacy systems allows digital transformation to happen in parallel with meeting customer needs. Without it we would have to wait for all the legacy systems to be replaced first before being able to deliver any digital transformation," it said. ®