State pension statements are confusing and need to be changed – according to a parliamentary committee report

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A new report by the Work and Pensions Committee says that state pension statements are confusing and ‘lacked necessary information’ – especially regarding the state pension age which is changing for women. It wants changes to be made as soon as possible.

What is a state pension statement?

A state pension statement is information that you can ask for from the Department for Work and Pensions. It shows you how much state pension you’ve built up so far and when you are due to get it. However, they are not necessarily accurate and certainly weren’t accurate in the past when they gave hundreds of thousands of women the wrong state pension age, ahead of the rise(s) in state pension age to 65 and 66.

What’s wrong with state pension statements?

The Work and Pensions committee says there are several problems with state pension statements.

Format

Important information can be hidden on the second or third pages of the state pension statement. Lin Phillips of the campaign group WASPI (Women Against State Pension Inequality) told the committee that state pension statements should be simpler and should have the important information in bullet points on one page.

Language

The language should be simpler so it can be easily understood. Currently, the committee was told, state pension statements are complex and give people too much information.

State pension age

As I’ve highlighted repeatedly on SavvyWoman, and as the WASPI group have provided evidence of in their thousands, women were not written to about the rise in state pension age to 65 until very late in the day. The WASPI campaign group said that the state pension statement should show an individual’s state pension age and the date at which they will reach that age, clearly and prominently on the first page of the statement.

Information that could be included

Some people said that extra information should be included, such as a full breakdown of the state pension forecast and a full record of National Insurance payments and/or credits, including where gaps are and what steps could be taken to fill them.

Information if you are ‘contracted out’

Since November 2015, the Department for Work and Pensions has been including ‘Contracted Out Pension Equivalent’ (COPE) information on state pension statements for people who have been contracted out. However, the committee said that a number of people and organisations told it that the way that the information was described in the statement was confusing and misleading.

For example, there’s should be a warning that the COPE figure is an estimate only and that the amount provided by the person’s pension scheme may be less than this.

SAVVY TIP: Contracting out means that you, and your employer if you were employed, could pay a lower rate of National Insurance in return for not getting an additional state pension (which was made up of SERPS – the state earnings related pension scheme between 1978 and 2002 and the state second pension after 2002).

Work and Pension Committee’s recommendations:

The Work and Pension Committee’s interim report on pension statements is part of a bigger enquiry into the new state pension. It issued the report today because it was so concerned about the confusing state pension statements. It makes a series of recommendations:

  1. Statements should be limited to one page in length;
  2. 1. Key messages should be highlighted in boxes to ensure they stand out clearly;
  3. 2. Statements should prioritise the current value of state pension built up, state pension age, the date that age will be reached, and how to build up additional benefits;
  4. 3. State pension age should be highlighted in a prominent position, especially for those whose pension age has changed;
  5. 4. The means of getting further information, such as a full breakdown of NI history, details and calculations of new state pension starting amounts, and calculations of deductions for period of contracting out should be clear and that information should be readily available;
  6. 5. The term ‘Contracted Out Pension Equivalent’ should be replaced by ‘contracting out deduction’;
  7. 6. The contracting out deduction should be explained better. It should be made clear that the person will get a reduced state pensions because they have paid reduced NI contributions, but that they get some or all of the amount they’ve ‘lost’ from their private pension (either a personal or workplace pension).

 

Useful links: 

The Work and Pensions Committee report into state pension statements 

Sign WASPI’s petition calling for fair transitional arrangements for women affected by the rise in the state pension age

There will be a House of Commons debate on the WASPI petition on February 1st at 4.30pm. You can watch this debate live on Parliament.tv

Related articles: 

How to get a state pension statement – and understand it

Raising the state pension age to 66; when can you expect your state pension?

VIDEO: The state pension age for women is rising

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