News in brief... state pensions underpaid

⬤ Pension savers seeking professional advice on how to turn their funds into regular retirement income will keep paying high fees for guidance, after regulators excluded it from a new “simplified advice” regime. The Financial Conduct Authority (FCA), the City regulator, wants more people to access financial advice, and hopes its new regime, where reduced regulation will apply, will help cut the cost of advice on more straightforward matters. However, the FCA says that decisions about pension income, such as whether to go for income drawdown or an annuity purchase, were too complex to be classified as simplified advice.

⬤ Thousands of people in their 60s and 70s should now start receiving letters from the Department for Work and Pensions (DWP) warning them that they may have been underpaid state pensions. A series of administrative errors at the DWP over several decades have resulted in gaps in many people’s national-insurance records – and thus led to reduced state pensions. The National Audit Office thinks 200,000 people could be owed £1.3bn in underpaid pension.

⬤ Next year pension providers will redouble their efforts to persuade the government to increase the minimum contributions payable under the autoenrolment pensions system. The current rules say that employees in the scheme should be paying at least 8% of salary into their pensions – from a combination of their own contribution, cash from their employer, and tax relief. But pension companies think this rate will lead to disappointing levels of income in retirement; they say a 12% contribution should be the minimum allowed.