Commenting on the report’s findings Barnett Waddingham senior consultant Malcolm McLean says:
“I am not especially surprised at the outcome of this survey.
“There is clearly a general unawareness and widespread confusion over the introduction of the new state pension, which comes into force for new pensioners only from 6 April 2016.
“This was very badly handled by the Government from the off with little attempt to fully publicise the full effect of the changes and with politicians seemingly more interested in promoting the pluses surrounding the new pension than explaining some of the limitations and downsides underpinning the policy. .
“Statements, for example, that there was to be a new “more generous, flat-rate, easier-to-understand” state pension were extremely misleading and it was never made clear that on cost grounds there had to be some losers as well as winners .
“The transitional arrangements for bringing in the new pension are incredibly complex with amongst other things deductions made for past periods of contracting-out of the state second pension (SERPS) which very few people understand and up to now the DWP has seemed incapable of explaining properly.
“And it is clearly nonsense to describe it as a “flat-rate” pension. In the first few years at least, variable amounts of pension will be payable – some (the majority) getting less than the full rate (£155.65 in 2016/17) and a few with largish amounts of SERPS on their record getting more. In the first year most people will receive the same amount of state pension they would have done under the current system. And in the longer term many of today’s younger workers will probably do worse under a capped single-tier state pension than they might have done under the existing system with a combination of the basic state pension and the additional earnings related pension (formerly SERPS)
“I don’t think we can over emphasise the importance of the state pension and why it is “cherished”,as the survey confirms, by so many of the over 55s. With the demise of high quality final salary occupational pensions and poor performance of the riskier alternative types the state pension is the bedrock of many people’s retirement plans and with it their hopes and dreams for the future. With inadequate savings and a relatively low (compared to other countries) level of state pension many people would have little option whether they like it or not to continue in work into much older ages.
“I am afraid the new state pension is not a panacea. Its main attribute is that eventually over time when we get through the transitional stages it should be simpler and easier to understand but it certainly won’t be more generous to all in the way it was initially promoted. Late in the day though it may be, a concentrated effort must now be made to properly promote and explain the workings of the new system together with the plans and programme for increasing state pension ages over the coming years and decades.”
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