The committee found widespread confusion over the impact of the new state pension, just weeks before its introduction, with many people left “unprepared and confused”.
The committee said following its recommendations, the Government has agreed to write directly to those people who do not meet the minimum qualifying period for the new state pension – 10 qualifying years of national insurance (NI) contributions at their state pension age. The Government has estimated that there are over 100,000 people in this group in the UK.
Frank Field, chair of the committee, said: “The committee has encountered untold confusion among people who wanted to know the value of their state pension, and who had received little or no communication from the Government.
“It looks as though the Government will begin to apply the lessons from our evidence, by writing to people who do not meet the minimum criteria for the new state pension. We very much welcome this initiative.”
Steven Cameron, pensions director at Aegon said: “We warmly welcome the Government having agreed to write individually to the estimated 100,000 people who don’t have sufficient NI contributions to qualify for the new state pension.
“It is vital that this group understands this as early as possible rather than facing a shock at state pension age.”
Gareth Shaw, head of consumer affairs at Saga Investment Services, said: “The changes that were introduced this year should wave away this complexity over time but with many of the new rules still fresh, the Government must redouble efforts to ensure people understand how they’re affected.
“Contacting those directly who do not have enough qualifying years is a good first step, but there are further challenges – how effective will the Government’s awareness campaigns really be in areas where it’s not contacting people directly?”
Former pensions minister Steve Webb, who is now director of policy at Royal London, said: “People with less than 10 years of NI contributions get no pension whilst those with exactly 10 years get over £2,000 per year.
“It is vital that the Government letters to this group flag the option to pay voluntary national insurance contributions to top up your state pension.
“For some people, a one-off voluntary contribution of just a few hundred pounds could add thousands of pounds a year to their retirement income.”
A Department for Work and Pensions (DWP) spokeswoman said: “We’re committed to being transparent about any changes to the state pension. Almost half a million people have already responded to our call to check their pension forecast online, which is enabling them to better plan for the future.”
