Women deserve 'swift' compensation after losing out due to pension age changes, says watchdog

Women affected by state pension changes which were not communicated adequately should receive an apology and compensation, potentially totalling billions of pounds, a report has said.

Women born in the 1950s were told they would have to wait longer for their state pension when changes to the state pension age to equalise it across genders were accelerated in 2010.

This sparked a widespread campaign. In March 2023, Sunderland City Council voted through a motion backing campaigners calling for compensation.

It is estimated a woman dies every 13 minutes while waiting for pensions compensation.

Now the Parliamentary and Health Service Ombudsman (PHSO) has asked Parliament to intervene and “act swiftly” to make sure a compensation scheme is established.

Women Against State Pension Inequality (Waspi) campaigners said it is now time for supporters to “put their money where their mouth is” with “a proper compensation package”.

The ombudsman said that, to date, the Department for Work and Pensions (DWP) has not acknowledged its failings, nor put things right for those affected.

The PSHO used a severity of injustice scale to determine a financial payment that it believes is appropriate and proportionate.

It believes women experienced a significant and/or lasting impact which is level four on the scale, which is between £1,000 and £2,950.

It has given this suggestion to Parliament and it will be up to Parliament to determine a remedy.

Calls were made for levels of compensation to be higher.

Peter Aldous, vice-chairman of the state pension inequality for Women All-Party Parliamentary Group (APPG), said “Compensation in line with category six injustice must be agreed by Parliament.”

Level six compensation is £10,000 or more.

Labour MP Rebecca Long-Bailey, fellow vice-chairwoman of the APPG, said: “The UK Government must right this historic wrong, and go beyond the recommendations of the Parliamentary and Health Service Ombudsman and deliver fair compensation to these women as a matter of urgency.”

Waspi chairwoman Angela Madden called for a “proper compensation package”.

She said: “The report at least finds that level four compensation is required, but politicians across party lines have previously supported level six – which would far more clearly and reasonably recognises the injustice and loss of opportunities suffered.

“We are now looking to those who have supported us over the years to put their money where their mouth is and back us on a proper compensation package. All the parties are now in the spotlight with Waspi women watching and waiting to see how they should best use their votes in the coming general election.”

The PSHO’s investigation found thousands of women may have been affected by DWP’s failure to adequately inform them that the state pension age had changed.

Its report said: “We recognise the very significant cost to taxpayers of compensating all women affected by DWP’s maladministration.

“Compensating all women born in the 1950s at the level four range would involve spending between around £3.5 billion and £10.5 billion of public funds, though we understand not all of them will have suffered injustice.”

Danni Hewson, head of financial analysis at AJ Bell, said: “This would be no cheap solution. The ombudsman puts the cost of compensating all women born in the 1950s at between £3.5billion and £10.5billion, although it acknowledges not all of them will have been affected. There will be pressure to move quickly.”

Work and Pensions Secretary Mel Stride is likely to appear in the House of Commons before the Easter recess to address the ombudsman’s recommendations, Penny Mordaunt suggested.

Commons Leader Ms Mordaunt said her colleague “will want to come to the despatch box”.

She added: “I would suggest… I hope we would be able to do it before recess.”

PHSO chief executive Rebecca Hilsenrath said: ”The UK’s national ombudsman has made a finding of failings by DWP in this case, and has ruled that the women affected are owed compensation.

“DWP has clearly indicated that it will refuse to comply. This is unacceptable. The department must do the right thing and it must be held to account for failure to do so.

“Complainants should not have to wait and see whether DWP will take action to rectify its failings.

“Given the significant concerns we have that it will fail to act on our findings, and given the need to make things right for the affected women as soon as possible, we have proactively asked Parliament to intervene and hold the department to account.

“Parliament now needs to act swiftly, and make sure a compensation scheme is established. We think this will provide women with the quickest route to remedy.”

The 1995 Pensions Act and subsequent legislation raised the state pension age for women born on or after April 6 1950.

The ombudsman investigated complaints that, since 1995, DWP has failed to provide accurate, adequate and timely information about areas of state pension reform.

The ombudsman published stage one of its investigation in July 2021. It found failings in the way DWP communicated changes to women’s state pension age.

The DWP’s handling of the pension age changes meant some women lost opportunities to make informed decisions about their finances. It diminished their sense of personal autonomy and financial control, the ombudsman said.

In addition to paying compensation, the ombudsman made it clear the DWP should acknowledge its failings and apologise for the impact it has had on complainants and others similarly affected.

It said it has received a series of complaints relating to how the DWP communicated a variety of state pension reforms, and concerns about communication of changes to the state pension age constitute only one area of complaint.

Baroness Altmann, a former pensions minister, said: “A cross-party remedy is needed and needed quickly. These women have waited long enough.”

A DWP spokesman said: “We will consider the ombudsman’s report and respond in due course, having co-operated fully throughout this investigation.

“The Government has always been committed to supporting all pensioners in a sustainable way that gives them a dignified retirement, whilst also being fair to them and taxpayers.

“The state pension is the foundation of income in retirement and will remain so as we deliver a further 8.5% rise in April which will increase the state pension for 12 million pensioners by £900.”

Downing Street declined to comment on the ombudsman’s report.

The Prime Minister’s official spokesman said: “The Government will now consider the ombudsman’s report and respond to their recommendations formally in due course, and we will also co-operate with the parliamentary process as we have done throughout with the ombudsman.”