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Pensioners don’t know if they’ll win or lose under new State Pension, MPs warn

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29/03/2016
Changes to the State Pension have been poorly communicated and most people don’t know if they will be winners or losers when the new £155.65 flat weekly rate is introduced on 6 April, MPs have warned.

The Work and Pensions Committee said the Government has sent a clear message about the flat rate amount but “failures of communication mean that too few people understand it.”

It said only 13% of those reaching state pension age in the first year of the New State Pension will receive the flat rate of £155.65 a week. Some 32% will receive more and 55% will receive less.

The Committee said the Department for Work and Pensions should write to those people who stand to receive less in the early years of the new State Pension than previously or have gaps in their contribution record, and clearly set out the person’s circumstances, the projected entitlements and the means of improving them.

This includes people with:
• fewer than 10 qualifying years of National Insurance contributions
• lower state pensions than they would have derived from a spouse’s contributions under the existing system
Both of these groups are mainly women.

It said the Government should also provide a new State Pension telephone hotline service for the recipients of these letters. By relying on individuals requesting a state pension statement or generating one on a website, the Government risks missing those it most needs to reach, the MPs added.

Frank Field MP, Chair of the Committee, said:”The New State Pension will ultimately be a welcome simplification of an over complicated system. The problem is that failures of communication mean that too few people understand it. The Government seems to have manged to muddle its communications to the point where neither the winners nor losers yet know who they are.

“There is no way that communicating changes which affect different groups very differently, over different timelines, should ever have been left to general awareness campaigns or happenchance. The oversimplified message about the flat-rate amount has left many people unprepared and confused.

“We very much welcome the commitment in the Budget to a one stop “pensions dashboard”, which we and others have been calling for. It is only one part of the answer though. Government must focus on identifying the individuals affected, assessing their potential losses, and communicating with them directly, clearly, and regularly. But nobody should underestimate the challenges of achieving this objective.”

Paul Green, director of communications for retirement experts Saga, said: “It is simply untenable that those approaching retirement can be treated with such disregard when it comes to their pension income. Most people make significant financial plans about their future based on what they believe they will get from their state pension and if inaccurate or outdated could leave them with little to no time to make up for this government information error.”

The new State Pension: key facts you need to know

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