Calls For Communication Clarity Over New State Pension

Government Failure To Communicate Leaves People Planning Retirement On Wrong Information

04.04.2016

Kate Rawlings, Press Officer | 0114 274 4238

Penny Cogher, Pensions Partner at Irwin Mitchell, says the Government must make it clear that many people will not receive the full flat-rate state pension when it is introduced on 6th April.

The basic and additional state pensions will be replaced by a flat rate, single tier state pension of £155.65 a week.

However, the House of Commons Work and Pensions Committee has published its Eighth Report of Session 2015-16, which states that the Government has not made it “sufficiently clear” that most people retiring on the new state pension will not receive the £155.65 weekly flat rate.

The report states that more than half (55%) of claimants would get less than £155.65, mainly because of contracting-out or contribution gaps.

The amount a claimant receives can be higher or lower than the weekly rate depending on an individual's National Insurance record and they will need 10 qualifying years of contributions.

The Work and Pensions Committee said that "failures of communication mean that too few people understand it" leading people to plan their retirement on the wrong information.

The new state pension report also found that around one third are expected to receive more than £155.65 after building up additional state pension under the current system. And by 2040, the proportion of people receiving the full flat rate is expected to exceed 80%.

People who already receive a state pension by that date will continue to receive their state pension under the existing rules.

The Department for Work and Pensions (DWP) said it was committed to ensuring the changes were understood.

Penny Cogher said:

Expert Opinion
“It won’t just be the Women Against State Pension Inequality (WASPI) campaigners who are aggravated about the quality of the communication, or lack of it, as regards changes to the state pension.

“The House of Commons Work and Pensions Committee’s 8th Report for 2015/16 concludes the Government has not made it “sufficiently clear” that most people retiring on the new state pension will not receive the new weekly flat rate of £155.65.

“Pension communication, as most employers and providers know, is not easy. The Government must tell it as it is, not as it wants it to be –adopting a headline approach isn’t helpful for pensions and it can be downright misleading.”
Penny Cogher, Partner