Too few people understand new state pension

News


29 Mar, 2016

Too few people understand new state pension

MP’s have warned that ministers have not made it clear that most people retiring on the new state pension will not receive the £155.65 weekly rate. The Work and Pensions Committee said that "failures of communication mean that too few people understand it".

It said 55% of claimants would get less than £155.65, mainly because of contracting-out or contribution gaps. The Department for Work and Pensions (DWP) said it was committed to ensuring the changes were understood.

MPs also called for the DWP to write to people who stood to receive less than previously expected and also set up a telephone hotline to deal with their questions.

In January, the committee warned that millions of people may be planning their retirement based on wrong information thanks to government "bungling".

The new state pension replaces the basic and additional state pensions from 6 April. People who are already in receipt of a state pension by that date will continue to receive their state pension under the existing rules.

Under the new state pension setup, the amount a claimant receives can be higher or lower than the £155.65 weekly rate depending on an individual's National Insurance record and they will need 10 qualifying years of contributions.

Around one third (32%) are expected to receive more than £155.65 after building up additional state pension under the current system.

By 2040, the proportion of people receiving the full flat rate is expected to exceed 80%, the communication of the new state pension report found.

The government has "managed to muddle" its communications about the reforms "to the point where neither the winners nor losers yet know who they are", the MPs said.

To secure your pension, speak to the experts at deVere Group today!

Today’s News - Maserati recalls nearly 21,000 cars in China