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04.04.16

Which? survey finds confusion about state pension reforms

Not enough people understand the new pensions system which comes into effect on Wednesday, according to a survey from consumer group Which?

The survey of adults aged 50-64 found that although 68% of all respondents and 80% of those aged over 60 were aware of the changes, many were unclear on the details.

Only 21% knew that the state pension age will be 65 for both men and women in November 2018, and 20% knew that the new rules do not affect those that have reached state pension age before April 2016.

Richard Lloyd, executive director of Which?, said: “This week sees major changes to the state pension, which forms a core part of many people’s retirement income.  While it’s promising to see that awareness of the upcoming changes is high, we’re only half way there. More needs to be done to make sure that people understand what the changes are and what they mean for them.”

Among the respondents, 55% didn’t know if those who have reached retirement age can top-up their state pension or not, 44% didn't know that the full rate of the new state pension will be £155, up from the minimum of £120, and only 18% knew if they had ever been contracted out of the state pension, which could reduce the overall amount.

Ros Altmann, minister for pensions, said: "It is vital that people check what their state pension is likely to be, especially when planning their future later life income."

A National Audit Office report, released on 24 March, said that the DWP had failed to provide clear information on the reforms to people with guaranteed minimum pensions, which will lose value under the changes because the government will end contracting-out arrangements that meant employees receiving the pensions did not also have to pay out National Insurance, and has not fully assessed how the changes will affect individuals.

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