MPs warn 'too few' understand new State Pension
The Government has failed to make it clear that many individuals retiring on the new State Pension will not receive the maximum rate, MPs have suggested.
Data contained within a new Work and Pensions Committee report on the matter revealed that just 13% of savers reaching State Pension age will receive the full amount of £155.65 per week in the first year.
Some 32% of retirees are expected to receive more than this, while 55% will receive less, possibly due to ‘contracting out’ periods or gaps in contributions.
The Committee has argued that ‘failures of communication mean that too few people understand [the new State Pension]’.
It is now calling for the Department for Work and Pensions (DWP) to write to those who will ultimately receive less. It has also urged for a telephone hotline to be set up to answer any questions that savers may have regarding the new State Pension.
Frank Field MP, chair of the Committee, said: ‘The new State Pension will ultimately be a welcome simplification of an over-complicated system.
‘The oversimplified message about the flat-rate amount has left many people unprepared and confused.’
However, the DWP has stated that it is committed to creating a simpler system that is easier to understand.
‘Millions stand to gain from the changes, including women and the self-employed, who so often have lost out in the past,’ said a DWP spokesperson.
From 6 April, eligible retirees will be able to claim the new State Pension if:
- they are a man born on or after 6 April 1951
- they are a woman born on or after 6 April 1953.
Those who reach State Pension age before 6 April 2016 will receive the current State Pension.