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Information on new state pension is ‘confusing’, says MPs

Paloma Kubiak
Written By:
Paloma Kubiak

People reaching retirement age are being given “confusing” information about the New State Pension, a group of MPs has said.

In October last year, the cross-party Work and Pensions Committee launched an inquiry into the New State Pension (NSP), amid concerns that changes had not been communicated effectively to the public.

The new single tier system, introduced under the Pensions Act 2014, replaces the basic and additional pensions for people reaching state pension age from 6 April 2016.

The current basic and additional state pension will be replaced by a new “flat rate” payment of £155.65 a week.

To receive the maximum new state pension, individuals will need 35 years of national insurance contributions up from the current 30 years.

From December 2018, the State Pension age for both men and women will start to increase to reach 66 by October 2020. See the full State Pension Age timetable here.

New State Pension widely misunderstood

The report, published today, says there is widespread confusion over what people will receive under the NSP and when they will receive it.

The Committee said it is “extremely concerned” by evidence State Pensions statements and forecasts are confusing and, in some cases, contradictory and do not provide people with essential information.

Witness thought they’d receive State Pension at 60

One witness told the Committee they received a letter in January 2005 from The Pension Service but it contained no increase in their State Pension Age, so they believed they were still going to receive their State Pension at 60.

They were then notified by The Pension Service in January 2012, two and a half years before their 60th birthday and told that they would not be receiving their State Pension until they were nearly 66 years old.

Today’s interim report calls on the Department for Work and Pensions (DWP) to urgently make changes to statements being sent out to those people nearing retirement.

The Committee will also produce a further report addressing other issues, such as the quality of other communications and the merits of transitional support to groups off women who’ve been the subject to a change in state pension age.

‘Retirement expectations have been smashed’

Rt Hon Frank Field MP, Chair of the Committee, said: “Successive governments have bungled the fundamental duty to tell women of these major changes to when they can expect their state pension.

“Retirement expectations have been smashed as some women have only been told a couple of years before the date they expected to retire that no such retirement pension is now available.

“We are also concerned about the accuracy of existing information that is being sent out to women about their state pension entitlement. Groups representing this grotesquely disadvantaged group of women have suggested a pension entitlement notice. And so have other experts who have given evidence to the Committee.

“We expect the Department for Work and Pensions immediately to call into the department these witnesses, hammer out a new pension entitlement notice, and begin supplying all women with accurate information on their pension entitlement.”

‘Committed to ensuring the public fully understands the changes’

A DWP spokesperson said: “We are committed to ensuring that the public fully understands the changes being made to the state pension, that is why we launched a multimedia campaign in 2014, which will continue over the coming months and years.

“We’ve sent out about half a million new State Pension statements since first launching them in September, 2014.  These statements include comprehensive information explaining the rules of the new scheme, and how we work out an individual’s estimate.

“And we will soon be launching a new digital service with HMRC, that will help all working age customers better understand their State Pension and how their National Insurance record affects this.”