Parliamentary Committees and Public Enquiries
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Communication failings leave new state pensioners uncertain

The Work and Pensions Committee publishes a report on the impact of the communication regarding the new state pension.

Report findings

With weeks to go before the introduction of the New State Pension, the Work and Pensions Committee says the realities of the impact of the policy on different groups have been poorly communicated to the point where even those who will be better off—and many will—do not necessarily know that.

Where the Government has sent a clear message, about the flat rate amount to be paid, it has been oversimplified so that many people incorrectly believe that is the amount they will receive, when in the fact the picture will be much more complex for many years to come.

Only 13% get flat rate in first year

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.*

The report sets out a series of case studies that exemplify the confusion over the timing and amounts of the New State Pension, and describes the different groups that stand to gain, and lose, versus what they might have expected to receive under the current system.

The losses are largely products of the simplification of an outdated and extraordinarily complex system, but that complexity makes it imperative to explain the impacts directly to those affected.

Department should contact those who stand to lose

The Committee says  the Department for Work and Pensions should now 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.

Concurrently, the Government should provide a new state pension telephone hotline service for the recipients of these letters, with experts that can discuss the strategy for increasing state pension entitlement that is most appropriate for their individual circumstances. 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 Government should also send automatic, annual state pension statements to all people aged 50 and over.

Chair's comment

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."

*13% of those reaching state pension age in the first year of the new state pension will receive the flat rate of £155.65. 32% will receive more and 55% will receive less.

Further information

 

Channel website: http://www.parliament.uk/

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