Backlogs will persist even after that, the government has admitted.

Up to 7,000 pensioners will be underpaid by as much as £100 a week in the meantime, owing to problems with calculations related to contracting out of the State Earnings Related Pension Scheme (Serps), although they will get the money they are owed - eventually.

And 193,000 old people could be underpaid by £1.25 a week on their basic pensions because 1997-98 contributions are not yet being taken into account.

Alistair Darling: Backlog continues

Social Security Secretary Alistair Darling set out the details of the problem in a detailed Commons written reply.

The problems arose in switch of computer systems by the Contributions Agency.

The £170m contract involving the change to the new system is being spearheaded under the Private Finance System by the firm Andersen Consulting.

In September Mr Darling acknowledged that while about 80% of new claims were unaffected by a decision to postpone implementation of part of the system, other records had to be used for about 100,000 claims since April.

In his detailed reply on Wednesday he said: "The key priority is to ensure that full normal operations can resume as soon as possible.

"It is expected that this will take until the end of this financial year. It will take longer to catch up on all backlogs."

'Pretty horrific'

A Department of Social Security source said work was going on all the time on the system, and that April 1999 was expected to be the "outside" date for completion.

Liberal Democrat social security spokesman David Rendel, to whom the reply was addressed, said: "It looks pretty horrific."

"Potentially hundreds of thousands of pensioners will be underpaid all year and heaven knows when they are going to get the right payments.

"It could be weeks, months, possibly even years before some of these people get their money. Some will no doubt never see their money."

There was also "money going out of the window" from the compensation that would have to be paid to people who had suffered - and cash the government may not be able to recover from people who are overpaid.

No records destroyed

In his reply, Mr Darling said the original plan was to switch computer systems completely by February last year, but it was subsequently agreed the process would be phased between February 1997 and April 1999.

There were implementation problems but no data was lost and no records destroyed, the social security secretary said.

He added: "In most cases the initial award of basic pension is likely to be correct, or an underpayment of £1.25 a week."

Compensation would be considered where benefit payments were delayed by the problems or people suffered adversely.