Clumsy government gives savers wrong state pension

News


12 Jan, 2016

Clumsy government gives savers wrong state pension

The new state pension, taking effect in just a matter of weeks, is widely misunderstood after confusing, contradictory and inadequate information sent out by officials, the cross-party work and pension select committee found.

A vast multitude of people have not been provided with essential information, including how much they will get and when under the new system, an interim report produced by the committee said.

Reforms to the state pension takes effect from April 6 2016, and had been heralded as a 'flat-rate' scheme that would be easy to comprehend. However, in reality communication around changes has been anything comprehendible.

Confusion is now widespread, said the "extremely concerned" MPs, who said the situation was so urgent that they been able to wait to finish their full inquiry before speaking out.

Women are particularly vulnerable to problems as their retirement ages are being brought into line with those of men.

One woman told the MPs she had been sent a letter by the Pension Service in 2005 that did not mention her retirement age. Then in 2012, two years before her 60th birthday and what she thought was her pension age, she received another letter saying she was not entitled until she turned 66.

The report said: "This lack of clarity increases the chances that people misunderstand the value of their state pension or the age from which they will receive it. In turn, this increases the chances that they will not best plan for retirement."