The UK government must make “urgent changes” to the information it provides about the new state pension as retirement expectations among women are being “smashed”, an influential group of MPs have warned.
The new system – which from April will replace basic and additional pensions for people reaching retirement age – is “widely misunderstood” and is the latest in a series of “bungled” efforts to reform the state pension, the work and pensions select committee said.
Some women, who had expected to receive their pension at 60, have only recently discovered that their retirements have been postponed by up to six years. This is part of the planned equalisation of the state pension age for men and women to 65 by November 2018, followed by a further increase to 66 in October 2020.
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The alarm has been sounded just three months before the introduction of the new state pension to those reaching pensionable age on or after 6 April 2016. Although aims to simplify the system have been welcomed, concerns have been raised that poor communication has led to confusion about the value of retirement pots and the age at which payments will begin.
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.”
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The committee’s inquiry into the new state pension was launched in October and is continuing. However, it says it is “so concerned about misinterpretation attributable to confusing state pension statements that we are issuing this urgent interim report”.
Tom McPhail, head of pensions research at financial services group Hargreaves Lansdown, said: “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.”
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