The Government has failed to make it clear that many individuals retiring on the new State Pension will not receive the maximum rate, MPs have suggested.
Data contained within a new Work and Pensions Committee report on the matter revealed that just 13% of savers reaching State Pension age will receive the full amount of £155.65 per week in the first year.
Some 32% of retirees are expected to receive more than this, while 55% will receive less, possibly due to ‘contracting out’ periods or gaps in contributions.
The Committee has argued that ‘failures of communication mean that too few people understand [the new State Pension]’.
It is now calling for the Department for Work and Pensions (DWP) to write to those who will ultimately receive less. It has also urged for a telephone hotline to be set up to answer any questions that savers may have regarding the new State Pension.
Frank Field MP, chair of the Committee, said: ‘The new State Pension will ultimately be a welcome simplification of an over-complicated system.
‘The oversimplified message about the flat-rate amount has left many people unprepared and confused.’
However, the DWP has stated that it is committed to creating a simpler system that is easier to understand.
‘Millions stand to gain from the changes, including women and the self-employed, who so often have lost out in the past,’ said a DWP spokesperson.
From 6 April, eligible retirees will be able to claim the new State Pension if:
- they are a man born on or after 6 April 1951
- they are a woman born on or after 6 April 1953.
Those who reach State Pension age before 6 April 2016 will receive the current State Pension.