- The Department for Work and Pensions has faced significant criticism over how it has managed long-term supersector state pension underpayments.
- Around 134,000 pensioners have been underpaid by over £1 billion, with certain mistakes going back to 1985.
- Baroness Altmann highlighted some reasons which have led to the DWP’s issues, including a high degree of complexity within the system, lack of staff training etc.
UK’s Department for Work and Pensions (DWP) has faced significant criticism over how it has managed long-term state pension underpayments.
The DWP had underpaid about 134,000 pensioners, largely comprised of women. The state pension entitlement was underpaid by over £1 billion, with certain mistakes going back to 1985. Last year, the DWP had launched a plan to help correct these mistakes.
According to media reports quoting UK’s former pensions minister Baroness Ros Altmann, this issue can be addressed by bringing in experts from the private sector (especially from actuarial and pensions administrations firms) to help resolve the errors.
Baroness Altmann highlighted some reasons for the issues, with the main cause being the underlying complexities within the system and the requirement of having to go over records from many decades ago.
Some other factors which were highlighted were the lack of staff training, insufficient data accuracy checks, and more.
Let us look at the investment prospects of 2 FTSE listed stocks related to pension business in the financial services super sector on the London Stocks Exchange (LSE) amid this development:
- XPS PENSIONS GROUP PLC (LON: XPS)
XPS is the biggest UK-based pure pensions consultancy firm. It belongs to the FTSE All-Share index.
The group recently agreed to acquire a specialist SSIP and SSAS pension scheme firm, Michael J Field Consulting Actuaries in a deal worth around £3.75 million.
About £2.25 million is expected to be paid upon the completion of the deal, and the remaining £1.5 million is a contingent consideration. The deal is being paid for in cash and is expected to be completed by next month in February 2022.
Image source: Refinitiv
XPS’ shares were trading at GBX 141.50, up by 1.43 per cent on 24 January at 12:47 hrs BST, while the FTSE All-Share index was at 4,151.62, down by 1.56 per cent.
The company has a market cap of £286.19 million and a one-year return of 15.98 per cent as of Monday.
- Pensionbee Group PLC (LON: PBEE)
The main market-listed firm, Pensionbee, is a UK-based online pension provider.
The group’s revenue growth, for the year ending on 31 December 2021, rose by 103 per cent on a year-on-year (y-o-y) basis to £13 million, compared to £6 million in the year before.
During the period, the group’s assets under administration (AUA) jumped by 91 per cent y-o-y to £2.6 billion, up from about £1.4 billion in the year before. This jump was mainly due to strong net flows from both new and existing customers. It was also helped by growth in the market.
Image source: Refinitiv
Pensionbee’s shares were trading at GBX 122.90, down by 5.46 per cent on 24 January at 13:07 hrs BST.
The company has a market cap of £288.03 million as of date. It was admitted to the LSE on 21 April last year.