Britons need more information about new single-tier pension, say MPs
5th April 2013
The Government must do more to inform individuals about the forthcoming single-tier state pension system which will affect around 40 million Britons, a report by the Work and Pensions Committee has said.
The Committee welcomed the improvements to retirement income that the new system will bring, but warned the transition period could be 'long and complex.'
Currently, the basic state pension is set at £107.45 per week, with various means-tested top-ups - known as the state second pension - taking it to up to £142.70. Under the new plans, this will be replaced with a single flat-rate pension of £144 a week.
Hailed as the biggest change to the state-pension in decades, Budget 2013 announced that the implementation of the new system would be brought forward to 2016.
Minister Dame Anne Begg, Chair of the Committee, said that, in the short term, many would see an increase in their state pension, particularly the self-employed, and women and carers who have been low-earners or had gaps in employment.
"It will be a much simpler system to understand and people will be able to see more clearly how much they can expect from the State. As a result, it will give greater certainty about the value of saving into a private pension scheme and will complement the new system of automatic enrolment into workplace pensions," she said.
However, she continued: "Individuals will be affected in different ways depending on a number of factors, including their age, and their previous pension and National Insurance contributions. There are already misconceptions about who stands to gain and who might lose. People closest to retirement understandably have the most immediate concerns."
The Committee said it was vital that the Government decided on a strategy for communicating the changes before the Bill comes before Parliament in the summer, including how information will be distributed via the internet.
"Now that the implementation date has been brought forward to 2016, it is even more important that people receive understandable and accurate information as early as possible."