A parliamentary committee has said that there’s lots of confusion about the new state pension and the government should write to those who have gaps in their National Insurance record or who will lose out – mainly women.
Q. Why is the committee looking into the new state pension?
A. The Work and Pensions select committee has been looking into the new state pension and, in particular, how well or badly the Department for Work and Pensions has communicated these changes. It’s published a couple of interim reports along the way looking at issues such as the state pension age rise. This is its final report on the new state pension.
Q. What did the committee say?
A. The committee said that communication ‘failings’ meant that many people didn’t know what they’d get from the new state pension. It said even those who will be better off under the new system didn’t know this.
It also criticised the government for oversimplifying the message about the flat rate state pension so that many people believe they will get the full rate, when they won’t. The committee found that only 13% of people will get the full flat rate state pension in 2016-17 (which will be £155.65 a week in 2016-17).
SAVVY TIP: The committee found that 32% of people will receive more than £155.65 a week and 55% will receive less.
Q. What does the committee want the government to do?
A. The committee wants the government to write to people who will get less than the full amount of the single tier state pension or who have gaps in their National Insurance record. It should tell them how they can make up the shortfall.
There are two groups that are largely or exclusively made up of women, which the committee says the government should write to as part of this exercise. They are:
- People who have fewer than ten years of National Insurance. Under the new state pension system, they won’t get any state pension at all.
- People who are due to get a smaller state pension than they would have been able to claim on their husband or civil partner’s National Insurance record.
SAVVY TIP: Under the old system, women could claim a basic state pension worth up to 60% of the full amount based on their husband’s National Insurance record.
- The government should send out automatic annual state pension statements to anyone aged 50 or over.
The committee also said that the government should set up a pensions telephone line so that people who wanted to know what they should do, as a result of receiving one of these letters, could get advice. The telephone helpline should be staffed by experts.
You can read more information about the Work and Pensions committee report into the communication of the new state pension on its website.
You can also download and read the full report.