The government has admitted that a “significant problem” resulted in hundreds of thousands people being told they would get a higher state pension than they were actually due.

A massive data blunder meant that 360,000 state pension forecasts handed out online over the past three years were out by up to £1,500, said Guy Opperman, the pensions minister.

The widespread error means thousands of people will have planned to fund their retirement based on misleading information. The former pensions minister Steve Webb called for an urgent stop to the incorrect statements.

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The extent of the failings is a major embarrassment for the government, which has been trying to persuade people of the merits of planning for their retirement using a long-awaited online tool called the pensions dashboard.

Problems with inaccurate forecasts had been previously raised with the Department for Work and Pensions, which initially tried to claim they were isolated errors.

The true size of the issue was was revealed in letter published on Tuesday from Mr Opperman to Mr Webb.

“Analysis has identified that currently no more than 3 per cent of people will be impacted by the issue you have raised,” Mr Opperman said.

“It is also important to note that omission or errors will be rectified before they retire. However, I nonetheless recognise there is a significant problem here.”

Erroneous forecasts have been issued from 2016 when the DWP launched an online checking service which was billed as “the go-to way for people to easily find out how much they could get, and when they could get it”.

Over 12 million forecasts have been issued with more than a third of a million now thought to have been incorrect. 

People who have been members of defined benefit pension schemes with “complex” work histories are most at risk of having incorrect forecasts.

The revelation will raise serious questions about the government’s ability to deliver its pensions dashboard project, which is due to go live this year.

Via the dashboard, savers are supposed to be able to get a “big picture” view all of the different savings pots they have accrued through various jobs over their lifetime. 

Mr Webb, who is now director of policy at Royal London, said: “People are increasingly encouraged to use online services to help plan their retirement, and the new pensions dashboard will rely heavily on such data. 

“It is therefore very worrying that hundreds of thousands of people may have received incorrect state pension forecasts and in some cases will have taken decisions about their retirement plans on the basis of incorrect information.  

“Now that the government is aware of the scale of the problem, it must put an urgent stop to the issuing of incorrect statements. 

“Individuals need to have confidence that the information they receive from the government is accurate and should not have to live with the uncertainty that a statement they have already received may be seriously incorrect.”

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