State pension reform 'needs better explanation'

pensions walking
Image caption The committee warned that the transition period to the new pension would be "long and complex"

The government needs to do more to explain the forthcoming revamp of the state pension system to the public, a cross-party group of MPs has said.

Members of the Work and Pensions Committee said they supported the principle of the new single-tier state pension.

But they said the government should do more to tell people about how it would affect individuals.

Some 40 million people of working age will be affected by the changes.

The committee said the new state pension would benefit many people.

"In the short to medium term it will mean more state pension for many people, particularly the self-employed, and women and carers who have been low-earners or had gaps in employment," said Dame Anne Begg MP, chair of the committee.

"But although the end result will be simplification, the transition period will be long and complex," she warned.

Communication strategy

The government announced plans for a new single-tier state pension in January this year.

Instead of a basic pension of £107 a week, plus various means-tested benefits, the new pension will be set at a flat rate of £144 a week, at current prices.

While many people will gain as a result of the changes, some who currently pay in to a second state pension - which is being abolished - will lose out.

The new system had been due to come into effect in April 2017, but in last month's Budget Chancellor George Osborne brought the date forward to April 2016.

The committee of MPs noted that this particular change made it all the more important that people received understandable and accurate information as soon as possible.

And they warned that there were already misconceptions about who stood to gain, and who might lose, as a result of the new pension.

"It is vital that the government decides on its high-level strategy for communicating the changes to the public by the time the finalised bill comes before Parliament in the summer," said Dame Anne.

"This should include how the internet will be used and what individualised information will be provided."

Remedial action

In particular, the committee was worried about anyone who thinks they might need to save more towards their pension, as a result of the changes.

"It is particularly important that groups of people who may lose out, or who believe that they may lose out, are given accurate information," the committee said.

They can then assess "whether they need to take remedial action, which might include making additional National Insurance contributions".

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Media captionDame Anne Begg MP says the government needs to be more proactive in providing information

"At the moment the headlines are that we are going from a state pension of £107 a week to a state pension of £144 a week," Dame Anne told the BBC.

"But of course that won't apply to everyone, because it will depend on the accrued rights that they've got," she said.

Earlier this week, MPs on the Communities and Local Government Committee criticised the coalition's plans to introduce universal credit, which aims to simplify the payment system for benefits.

They asked the government to give assurances that the new system would not lead to a rise in fraudulent claims.