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UK Department for Work and Pensions apologises for severe "backlog"


A recent report from the BBC states that the Department for Work and Pensions has apologised for backlogs in recent pension payments to individuals across the UK.


Officials have apologised to the ‘low thousands’ that have been affected, however, an estimated 200,000 female pensioners are collectively owed up to £2.7bn after the under-payment.


This delay in pension payments will come as a significant shock to those affected as state pensioners incomes are extremely limited.


This means that any delay in such payments will mean that those on these fixed incomes will likely have to downgrade to consuming more inferior goods in an effort to survive, and, in some cases, certain pensioners may have to cut back altogether.


This will lead to a rise in food poverty within the UK which will increase the nation’s dependency on charitable organisations such as food banks, which, have already seen rising demand during the COVID-19 pandemic as evidenced by the Trussell Trust sending out a record 2.5 million food parcels.


"For people who rely on the state pension as a relatively high proportion of their income it could be a bit of a disaster," said David Sinclair, director at the International Longevity Centre UK.


At the same time, this delay in pension payments will also hurt state pensioners as the incoming winter will force these individuals to further cut back on what they consume.


Rising gas prices due to resource shortages paired with the rising demand for heating will place additional strain on the incomes of state pensioners as they will be forced to micromanage the limited income they have available to them to get by. Consequently, once gas prices rise and this price hike is passed onto the consumer, this micromanaging of income will be impossible to do for state pensioners, thus forcing some to further downgrade their living standards as they switch to inferior products or cut back altogether.


Nevertheless, the government is working hard to get these pension payments back on track to ensure that the most vulnerable individuals within society have enough disposable income to maintain their current living standards without being forced to downgrade by a significant amount.


The way the Department for Work and Pensions is doing this is by allocating more resources towards handling delayed pension payments.


Pensions Minister Guy Opperman told MP’s that hundreds of department staff were being redeployed to deal with the backlog in payments.


He then stated that the system would be back to normal in October.


"All those affected have been identified and we have deployed extra resources to process these as a priority. Any claims made today should not be subject to delay." A Department for Work and Pensions Spokesperson illustrated. However, even though the Civil Service is working hard to return things back to normal, state pensioners will also see a reduction in their living standards in the years to come. This is because pensioners were also told earlier this week that the "triple lock" formula for annual state pension increases would be suspended for a year, thus meaning that the state pension will not rise with inflation.

Therefore, because state pensioners will be on fixed incomes, they will see a reduction in living standards as inflation, which currently sits at 2.0% CPI, as shown below, will erode the purchasing power of state pensioners.

If this erosion persists, then state pensioners will find themselves in a scenario where they will continually be forced to cut back on the goods they consume in the coming years, thus decreasing living standards and increasing inequality within the UK.

 

Written by Hubert Kucharski

Research compiled by Jonas Theaker







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