Thatcher-era ICL Mainframe Fingered For Failure To Pay Out Over £1bn In UK Pensions

UK spending watchdog the National Audit Office has found that a 34-year-old computer system was one of the causes of a scandal which led to more than £1bn of state pensions not being paid.

In a report published today, the NAO said that contributing to systematic errors were processes which relied on systems with "limited automation" and required "the use of multiple systems and interpretation of complex rules."

"Where caseworkers identify that future action may be needed on a claim they must manually set a prompt on the IT system," the report said.

"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 problem concerns rules under which married women could claim 60 per cent of their basic state pension based on their husband's record of contributions. The Department for Work and Pensions (DWP) is set to pay around £1.05bn to pensioners affected, some of whom have battled for years to get the errors recognised. Staff time on the repayments is expected to mount to £25m and the job will not be finished before 2023.

The BBC quoted one grandmother of four as saying she had spent two years battling for her money before she eventually received £7,334 in back payments for eight years of missed pensions.

A DWP spokesperson said: "We are fully committed to ensuring the historical errors that have been made by successive governments are corrected, and as this report acknowledges, we're dedicating significant resource to doing so. Anyone impacted will be contacted by us to ensure they receive all that they are owed.

"Since we became aware of this issue, we have introduced new quality control processes and improved training to help ensure this does not happen again."

The NAO report said that when working on a claim, DWP staff access different IT systems and manually copy information from one system to another to calculate the award. Up to four systems might be needed, including:

• The National Insurance Record System (NICs) owned by HM Revenue & Customs (HMRC)
• The DWP's Pension Service Computer System, launched in 1988 and still used to manage the live State Pension caseload
• The Customer Account Management system (CAM), launched in 2006 to support record management and history of the State Pension
• The CAMlite system, also launched in 2006, for customers who live or have lived outside the UK

However, an earlier NAO report from 2013 [PDF] described a "Pension Strategy Computer System," presumably the same as the aforementioned Pension Service Computer System (PSCS).

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The DWP introduced the PSCS in 1987 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.

Fujitsu said it would support VME until 2020. "After that date, organisations have a choice of moving to alternative solutions or further extending VME by using a cloud-based service that Fujitsu plans to make available as a managed service," the NAO said. "This will enable VME users to run their legacy applications on modern infrastructure."

According to reports, that contract was extended for one year with a £29m Fujitsu deal.

Trade association TechUK reported that the system had been re-platformed away from the mainframe environment in January 2021.

The Register has contacted the DWP for further details. ®