Business

Pension information given to millions 'is wrong'

Notes and coins Image copyright PA

Millions of people may be planning their retirement based on wrong information thanks to government "bungling" MPs have warned.

The Commons Work and Pensions Committee said details sent out about when people will get state pensions and how much they are worth were "inadequate" and "confusing".

It warns this particularly applies to women, whose pension age is changing.

The DWP said it was working hard to help people understand the issues.

The state pension age will reach 66 by October 2020, with women's pension age being raised to match that of men's.

Previously, women's state pension age was 60, with men's set later at 65.

The Work and Pensions Select Committee has prepared an interim report on the New State Pension (NSP), which replaces the basic and additional state pensions from April.

MPs said they had done this because the situation was too urgent to wait for the full inquiry to be completed.

Misunderstanding

The report said there were "widespread concerns" that women had been unaware of increases in their state pension age dating back to 1995.

One woman told the MPs she had been sent a letter by the Pension Service in 2005 that did not mention her retirement age.

In 2012, two years before her 60th birthday, which she thought was her pension age, she received another letter saying she was not entitled to draw that until she turned 66.

The report said: "At a crucial time of reform to the state pension and the state pension age, Department for Work and Pensions (DWP) statements are insufficiently clear.

"This lack of clarity increases the chances that people misunderstand the value of their state pension or the age from which they will receive it. In turn, this increases the chances that they will not best plan for retirement."

'Bungled'

The committee said statements should be fitted on to a single page, with key messages highlighted in boxes for greater ease of understanding.

They should list the current value of the state pension built up alongside the age at which people will be eligible to receive the income, and how they can build up retirement funds.

The committee's chairman, Frank Field, said: "Successive governments have bungled the fundamental duty to tell women of these major changes to when they can expect their state pension.

"Retirement expectations have been smashed as some women have only been told a couple of years before the date they expected to retire that no such retirement pension is now available."

A DWP spokesman said: "We are committed to ensuring that the public understands the positive changes being made to the state pension. We've already done a huge amount - including TV, radio and print advertising - and this activity will continue over the coming months and years."

They added that the DWP was working closely with the select committee on its current inquiry.

More information on the state pension is available here.

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