27 September 2023

UNITED KINGDOM: IT failure in pension payment ‘shambles’

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The United Kingdom Parliament’s Public Accounts Committee (PAC) is calling on the Department for Work and Pensions (DWP) to urgently review its IT strategy after a “shameful shambles” in pension under-payments.

Issuing its call, the Committee said a reliance on out-of-date systems and manual processing had led to historic under-payments to thousands of people totalling more than £1 billion ($A1.9 billion).

A report on DWP’s conduct, published by the PAC blamed the Department’s failure to recognise the importance of having fit-for-purpose technology to handle its pensions processing as a central issue that its senior officials must address.

Last year the National Audit Office said close on 134,000 people who first claimed their State pension before April 2016 had not been paid their full entitlement, with the average under-payment estimated at around £8,900 ($A16,861).

The watchdog said that in addition to the bill for rectifying the under-payments, DWP was on course to spend £24.3 million ($A46 million) on staff to oversee the exercise.

In their report, PAC members said this correction exercise, which is due to continue until the end of 2023, required the recruitment of 500 additional staff and was having knock-on impacts on the processing of new claims.

The PAC said experienced, specialised staff had been moved away from business-as-usual work as a result of the emerging problems.

It said there was a risk that the errors which led to the original under-payments would be repeated — and potentially also with new claims.

The report said DWP’s failings stemmed from its decision not to upgrade the Pension Service Computer System, which was introduced in 1988, and to instead introduce new systems to run alongside the legacy system to manage millions of pensioner records.

Chair of the PAC, Dame Meg Hillier said pensioners and taxpayers were now “paying in spades” for DWP’s reliance on a clunky State pension system that required staff to check many databases.

“This is a shameful shambles,” Dame Meg (pictured) said.

“The PAC expects the DWP to set out the step changes it will make to ensure this is fixed,” she said.

London, 1 February 2022

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