100,000 to be told ‘no state pension’

Parliament-Building-UK-London-700x450.jpgThe Government is to write to 100,000 people within 9 years of state pension age it believes will not build up sufficient years to qualify for the new state pension.

Following pressure from the Work and Pensions Committee, chaired by Frank Field MP, the Government says it will contact those unlikely to receive any state pension, but it has rejected the Committee’s proposal that everyone age 50 or over should receive a written personalised pension statement, saying the cost of doing so would total over £100m a year.

Instead it will consider adding additional messages to existing communications, directing individuals to the Check Your State Pension Service website.

The Government has also rejected a call from the Committee for the establishment of a state pension hotline for individuals receiving letters of entitlement, that would give assistance and guidance on how to build extra state pension entitlement. The Government says a new hotline is not necessary in light of existing written and telephone services available to those who do not wish to engage digitally.

The Government response says: “We have established that it is possible to identify individuals who are now within 9 years of State Pension age and whose National Insurance record suggests that they will not have 10 qualifying years of National Insurance contributions when they reach their State Pension age.

“Subject to normal testing, we propose writing to this group as a one off exercise, integrated into the overall awareness campaign. This will test whether direct mail is more effective for this group given we can identify them and we believe it is possible to formulate a clear message and call to action. We estimate that in the UK there are over 100,000 people within this group. We will evaluate this exercise to gauge its efficacy.”

Aegon pensions director Steven Cameron says: “We warmly welcome the Government having agreed to write individually to the estimated 100,000 individuals 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. Some may be able to take steps to improve their retirement prospects either through paying extra voluntary NI contributions or by contributing to a workplace or private pension.

“But this is just a first step and we urge the Government to go much further and write directly to every individual to provide them with an estimate of what state pension they are on target to receive. This should then be updated periodically. Our research shows that millions of individuals have no clear understanding of how much or how little they may receive as a state pension. While people can now request a projection, the majority will not think of doing so. Sending out individual personalised state pension forecasts would mean individuals could look at these alongside their private pension forecasts, take stock of whether they are doing enough for the retirement they aspire to, and if not take early action.”