MPs to probe state pension shambles

MILLIONS of workers will be disappointed by their payouts under the new state pension, MPs warned yesterday.

Announcing an investigation into the shambolic shake-up, they questioned whether it had been explained properly to workers.

Ministers have promised that the new flat rate pension of £151.25 a week will be fairer.

But Money Mail has discovered that just one in three will receive the full amount when it comes into effect in April. The Commons work and pensions committee will investigate whether the new deal has been explained in an ‘ adequate, consistent and accurate’ way and whether the Government is fully prepared to bring in the reforms.

Frank Field, the Labour chairman of the committee, said: ‘There is a sense that Government has somewhat moved the goalposts in retirement

From the Mail, September 30

savings, without providing enough information and a risk that some people may face a shock when they come to claim their pension.

‘It is important that groups most affected by the changes receive targeted communications that highlight the options available to them.’

Unveiling the new state pension, ministers said anyone with 35 years of national insurance contributions would receive it.

But it has since emerged that this is not necessarily the case.

Those hardest hit include workers who at some point in their lives have had a final salary pension and women who have given up work to stay at home and raise a family. Under the old system these women would have been able to receive a pension based on their husband’s record.

But following the shakeup they will have to build up a pension of their own.

By contrast, selfemployed workers will do much better. Under the current system the maximum they can receive is £115.95 a week.

Tom McPhail, of investment firm Hargreaves Lansdown, said: ‘It seems as though the Government hasn’t got to grips with how they explain the complexities of the reforms and how they communicate what they mean to real people.

‘There will be losers as well as winners and the Department for Work and Pensions needs to properly explain who they are.’

Last month pensions minister Ros Altmann claimed these workers would be better off in the long run.

But she admitted that the new system was very complicated.

A spokesman for the DWP said: ‘The new state pension reflects a bold move to create a system that will be simpler in the future and easier to understand.

‘We are committed to communicating these changes to the public.’

Minister must end pension shambles