80% of over 50s are baffled by the new state pension plan while nearly half don’t know how much money they are entitled to
The majority of those approaching retirement are ignorant of vital details of the new state pension, a survey has revealed.
The Daily Mail reports that four in five over-50s do not know if they will be affected when the new pension system comes into effect next week.
The same number do not even know what their pension age will be – while nearly half do not know how much money they are entitled to. This is despite more than two thirds of people aged between 50 and 64 being aware that changes are on the way. Consumer group Which? warned that there is widespread confusion about the system just days ahead of its introduction on Wednesday. The organisation called on ministers to do more to ensure those affected know what will happen.
According to the survey carried out by the group, just 20 per cent of middle-aged people are aware of the state pension age – despite dramatic rises for women in particular seeing it reach 65 for both sexes by the end of 2018. Meanwhile four in ten (44 per cent) could not say what the new pension rate will be. From 6 April, those entitled to the full benefit will get £155.65 a week – compared with the current basic state pension of £115.95. Alarmingly, the survey found that nearly one in five, 18 per cent, did not know if they had ever been contracted out of the state system. Those who have opted out, even for short periods, may find themselves left with a much smaller pension than they are expecting. Over half, 55 per cent, were unaware that they can top up their state pension by making extra national insurance payments until next April.
Which? said that although the new system was meant to simplify matters, ‘there is still confusion about how the new system impacts consumers’. Director Richard Lloyd said: ‘Next week sees major changes to the state pension, which forms a core part of many people’s retirement income. ‘While it is promising to see that awareness of the changes is high, we’re only half way there. More needs to be done to make sure that people understand what they are and what they mean.’ Ministers said anyone over 50 can get a written estimate of how much their state pension might be worth. Pensions minister Ros Altmann added: ‘It is vital that people check what their state pension is likely to be, especially when planning their future later life income. ‘The Government is introducing a new state pension system which will be easier to understand and a new digital online individual state pension forecast will be available to make things much easier. ‘This is in public testing now and in the meantime anyone over age 50 can get a written statement showing their estimated state pension.’ The survey was carried out by GMI among 1,000 people aged 50 to 64.
(Article source: The Daily Mail)