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MPs launch inquiry into new state pension

Joanna Faith
Written By:
Joanna Faith

MPs are to probe planned state pension reforms amid concerns that changes have not been communicated effectively to consumers.

The Work and Pensions Committee said it has launched an inquiry into the new state pension, which is due to come into force in April 2016.

It said members of the public do not know enough about the changes and what they will mean for their pensions.

It is particularly concerned about people who are close to retirement now who may have done “most or all of their retirement planning and saving under the “old” system.”

“The introduction of the new state pension from April 2016 is a major reform and will affect millions of people currently of working age. Although in the long term the reforms will simplify the state pension, the transition period will be long and complex, and there is a lot of uncertainty among people who will be affected about the impact of the reforms, especially for those now closest to state pension age,” the committee of MPs said.

“While many people are expected to be better off, people with for example less than 10 years of National Insurance contributions will no longer receive any state pension, and people will no longer be able to count on a percentage of their spouse’s pension after their death. People need a good understanding of what to expect from the new state pension to aid retirement planning, and avoid confusion and shocks.”

Under the reforms, the current basic and additional state pension will be replaced by a new “flat rate” payment of around £155 a week.

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

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