Pensions  

DWP reports rush to use state pension forecast tool

DWP reports rush to use state pension forecast tool

The number of people requesting a state pension forecast has shot up by three and a half times since the government launched its online state pension calculator, the Department for Work and Pensions has revealed.

Between February, when the tool was launched, and September 2016, 1.5 million people requested a state pension forecast, with 80 per cent using the online tool.

In the 12 months prior to that, just 860,000 people requested a forecast via the old paper based route.

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Assuming those numbers would have remained steady, that meant approximating three and a half times as many people have received a state pension forecast as a result of the tool than would otherwise have done.

In February, the tool website received 18,000 visits, but by September this had shot up to 343,000 visits. DWP reported that 90 per cent of users said they were satisfied with the tool.

Pensions minister Richard Harrington compared the new tool to online banking, saying it made it "easier than ever before" for people to find out what they can expect to receive when they retire.

"I want to encourage everyone to use this online service to help them make informed decisions about their retirement, and I’m delighted that so many savvy savers are already doing this," he said.

Until February, state pension quotes could only be requested by post, and took several weeks to arrive.

The online tool provides details of the weekly, monthly and annual income the user can expect to receive, the date on which the user will be eligible to claim, and how many more years of National Insurance contributions they must make in order to get the full amount.

It does not contain information on inflation-linked increases, or indicate how much the user will receive if they fail to contribute for the full period - between 30 and 35 years, depending on when they were born.

A warning states the quote “is not a guarantee and is based on the current law”.

To access the service, people must set up a Government Gateway account, provide their National Insurance number and the details of another document, such as a British passport.

The tool was launched when Baroness Ros Altmann was pensions minister. 

In May, when the tool was still in its testing stage, Baroness Altmann told FTAdviser: “The idea is to help people understand what they can expect from their state pension so they can build their extra private income on top.

“Under the old system nobody could predict their future state pension, but with this new digital service that will be pretty easy,” she said, calling it a “revolutionary“ step forward.

The launch of the tool came as the industry and government worked towards the creation of a pension dashboard that will allow consumers to view all their pensions in one place.

There is almost universal agreement that the state pension should also feed in to the dashboard.

james.fernyhough@ft.com