In a report published today, the Committee says it has become clear over the last few months that the New State Pension is widely misunderstood. The new system, which was introduced under the Pensions Act 2014, replaces the basic and additional pensions for people reaching state pension age from 6 April 2016. The evidence collected for this inquiry suggests that confusion over what people will receive from the NSP – and when they will receive it - is 'rife'.
The Committee says is extremely concerned at evidence that State Pension statements and forecasts are confusing - and in some cases contradictory – and do not provide people with essential information.
One witness to the inquiry recounted: ‘I was not aware of the 1st increase although I was sent a letter in January 2005 from The Pension Service but it contained no increase in my State Pension Age. So in 2005 I still believed I was going to receive my State Pension at 60. I was then notified by The Pension Service in January 2012, 2 ½ years before my 60th birthday, that I would not be receiving my State Pension until I was nearly 66.’
The Committee is now producing a further report addressing issues including the quality of other communications and the merits of transitional support to groups of women who have been subject to a change in state pension age.
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."
Tom McPhail, Head of Retirement Policy at Hargreaves Lansdown, added:
“The fundamental aims of the various changes, to move to a simpler state pension, payable at a later age to reflect improved life expectancy and without discriminating according to age, were and still are the right thing to do.
"However, successive governments have given inadequate consideration to the impact of these changes on individuals and how they should be communicated. Even now, just a few months before its launch, the present government is scrambling to get its New State Pension statements fit for purpose. They have had years to prepare, in some cases decades. This poor decision making and complacency regarding the importance of good communication, have undermined what were fundamentally good policies.
"It is also now leading to calls, very late in the day for some aspects of the policy changes such as the state pension age increases for some women to be revisited; these should all have been properly dealt with years ago.
"As highlighted by the Committee’s report, some recent changes to the statements such as the introduction of a ‘contracted out pension equivalent’ statement, may well lead to more confusion rather than less.”
