Six out of every 100 claims were underpaid in the last year, official data reveals.
Retirees missed out on huge sums of State Pension funds in the last year due to Government errors, new figures have revealed.
A total of £450 million was underpaid during the 2024/25 financial year ending in April.
This represents a slight improvement on the £470 million underpaid in the previous financial year.
At the other end of the scale, a total of £190 million was wrongly overpaid to claimants, down from £170 million the year before.
Why are claimants underpaid?
According to the DWP, the main reason for underpayments was a result of incorrect recording of claimants’ National Insurance Contributions.
"The main error within this category continued to be around the historic recording of Home Responsibilities Protection (HRP), administered by HMRC," it explained.
"HRP was a scheme existing from 1978 to 2010 to protect the State Pension entitlement of people with domestic caring responsibilities.
"HRP reduced the number of qualifying years needed to get a full Basic State Pension.
"Some people have not had all eligible years of HRP recorded on their National Insurance records, and so have an incomplete record affecting their State Pension entitlement."
The second most common reason for underpayments was DWP failing to act on reported changes to marital status or at age-related trigger points.
"These errors include claimants who have not received amounts they are entitled to inherit from a deceased spouse or civil partner, or where individuals who are married or in a civil partnership have not received the automatic uplift based on their spouse or civil partner’s National Insurance Contributions."
'Small errors have a big impact'
Jon Greer, head of retirement policy at Quilter said the latest figures highlight how complex the State Pension system is.
"While the overpayment rate for State Pensions remains incredibly low at just 0.1%, that still equates to a staggering £190 million of taxpayers’ money being paid incorrectly. This serves as a reminder of the difficulty of administering a benefit that supports over 12 million people and costs £142 billion a year," he said.
"What’s more concerning is the sharp rise in official error.
"Overpayments due to administrative mistakes by the DWP soared in value from £20 million last year to £110 million, a statistically significant increase driven by miscalculations on the additional components of the State Pension.
"These elements, which sit on top of the basic State Pension, are prone to error and highlight how even small administrative slips can snowball when dealing with such large sums.
"On the flip side, underpayments remain a bigger issue than overpayments, with £450 million of State Pension payments not reaching the people entitled to them.
"That includes many women who were impacted by historical issues with Home Responsibilities Protection.
"These legacy issues continue to plague the system despite a correction programme being in place.
"These figures underscore the importance of proactive communication from the DWP and HMRC, particularly for people with complex entitlements.
"Given how vital these benefits are in old age, there’s little room for error."