Research published by Which has revealed many of those approaching retirement are confused about aspects of the new state pension.
From this Wednesday (6 April), a new state pension system will take effect, aiming to simplify how much people will receive when they are eligible to claim the state pension.
Last month, FTAdviser reported that government communication of changes to the state pension had been so bad “neither the winners nor losers yet know who they are”, according to the Work and Pensions Select Committee, in what Saga at the time branded a “shambles”.
Which’s poll of 1,000 adults in February showed two thirds of those approaching the state pension age (50-64 year olds) were aware that changes were coming in, rising to 80 per cent of those aged between 60 and 64.
However, the consumer organisation said it found there is still confusion about how the new system impacts consumers, with only one in five knowing the state pension age will be 65 for both men and women in November 2018.
Additionally, only one in five knew that the new rules do not affect those that have reached state pension age before April 2016.
A total of 55 per cent did not know if those who have reached retirement age can top up their state pension or not, while a further 44 per cent of people admitted they do not know what the full rate of the new state pension will be from 6 April.
Alongside this, only 18 per cent of people Which asked knew if they had ever been contracted out of the state pension.
Which executive director Richard Lloyd, said that more needs to be done to make sure people understand what the changes are and what they mean for them.
Pensions minister Baroness Ros Altmann, stated it is vital that people check what their state pension is likely to be, especially when planning their future later life income.
“The government is introducing a new state pension system which will be easier to understand and a new digital online individual state pension forecast will be available to make things much easier.
“This is in public testing now and in the meantime anyone over age 50 can get a written statement showing their estimated state pension.”
Martin Palmer, head of the corporate funds proposition at Zurich, commented that while it is good the government has taken steps to simplify the state pension, it is still far too complicated.
“To help people plan properly for retirement, the government needs to ensure that the planned pension dashboard includes a forecast of the state pension, as well as allowing savers to see all their other pots in one place.
“It’s hardly surprising that so few people know the state pension age. The reality for people in their early 50s is that, while current provisions assume they will retire at 67, this is likely to have risen further by the time they get to retirement.
While it is now clearer how much people will get under the state pension, there is still uncertainty over when they will actually start to receive it,” he added.
ruth.gillbe@ft.com
