In a report, the WPC said:
"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% 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 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.
These include people with less than 10 qualifying years of National Insurance contributions, and those with lower state pensions than they would have derived from a spouse's contributions under the existing system - both groups are mainly women.
The WPC added that the losses are "largely products of the simplification of an outdated and extraordinarily complex system, but that complexity makes it imperative to explain the impacts directly to those affected".
The Committee is also calling for the Government to 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. By relying on individuals requesting a state pension statement or generating one on a website, the WPC believes 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, the Committee says.
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."
Paul Green, director of communications at Saga, said:
"It is simply untenable that those approaching retirement can be treated with such disregard when it comes to their pension income. Most people make significant financial plans about their future based on what they believe they will get from their state pension and if inaccurate or outdated could leave them with little to no time to make up for this government information error.
"Unfortunately despite commitments from Government Ministers that these changes would be well communicated this appears not to be the case. It's like history is repeating itself with striking similarities to the shambles that occurred around women's state pension age. Government Ministers have repeatedly claimed that changes to women’s state pension age were well communicated, but the very women themselves knew nothing of these changes. It is surely not too much for those saving for retirement to get fair treatment along with accurate and timely information.
"Perhaps less time should be spent on developing adverts with giant furry pension monsters, and more time on getting the basics right would avoid the monster mess the Work & Pensions Select Committee investigation highlights."
Kate Smith, Head of Pensions, Aegon UK added:
“For most, the State pension is the bedrock of their retirement income. It’s absolutely fundamental that people know exactly when and what they will receive from the government so they can plan their retirement. Effectively there’s a new State Pension Age every month for women as it gradually equalises at age 65 for men and women in 2018, then moves to age 66 by 2020, and many people won’t realise this. In addition, most people don’t know how much new State pension they will get, particularly given complicated transition arrangements to the new flat rate pension. There’s a further challenge in that people probably aren’t aware they won’t receive their State pension automatically, but have to claim it which is could be difficult if you don’t know your state pension age.
“To give people absolute clarity, the government needs to send everyone personalised statements setting out what they get from the State just like the pension industry does for private and workplace pensions. Sending automatic statements to the overs 50s is a start, as this group is most affected by the rising State Pension Age and transition to the New State Pension. A pension dashboard, which has been under discussion in policy circles, where people have the ability to see all their pensions online, including the State pension could be a major step forward in helping people plan for their retirement. People will be able to see exactly what they have built up and what more they need to do to achieve the retirement income they aspire to.”
