Chris Noon, commenting on the Work and Pensions Select Committee’s interim report looking at the how the DWP is communicating the new State pension to those approaching retirement, calls for broader communications to be looked at in the full report:

We agree with the Work and Pensions Select Committee that the new State Pension is widely misunderstood. Due to the speed of the transition the redistribution of Government spend on State pensions is extreme. Many people will not know how much they will be entitled to in the near future or the impact this has on their long-term pension position. While the Single Tier pension will go some way towards simplifying a complex system the transition throws up a number of anomalies. Working out who the winners and losers are is incredibly complicated. Individuals will not be able to work out their starting amount – they will need to be told.

Today’s interim report focusses on the communications to those approaching retirement. While we welcome the sense of urgency it creates in dealing with the issues for those approaching retirement, we also hope that the full report looks at how the new State pension is being communicated to the whole workforce – not just those approaching retirement. This is because the majority will receive less State pension in the new regime than they would have done in the old.

We see first-hand how much of a savings shortfall two thirds of UK workers face. Around 20m workers will lose out under the new regime (see infographic below). In this context it is vital individuals know how much they will be entitled to so that they have an opportunity to make up the savings shortfall.

The reduction in State entitlements effectively neutralises and undermines the effects of auto enrolment on the majority of individuals’ pension positions. In that context it’s fair to assume reliance on State benefits will increase in the future. In the interests of sustainability, this puts even greater emphasis on the need for clearer and more targeted communications around reduced State benefits. The DWP has been too broad brush in its approach thus far to raise awareness.