With just over 500 days to go, Work and Pensions Secretary Iain Duncan Smith and Pensions Minister Steve Webb will today (18 November 2014) launch a major new drive to help people understand historic reforms that will introduce a flat-rate State Pension to give people a greater sense of economic security and peace of mind in retirement.
The reforms will tackle inequalities of the past, with women, carers, lower earners and the self-employed to benefit the most.
In the first 10 years, Department for Work and Pensions (DWP) analysis suggests that around 650,000 women are expected to benefit from the transition valuation, receiving on average £8 a week more in State Pension.
Ministers are urging everyone – and the over-55s in particular – to look at what the changes will mean for them and to secure a detailed State Pension statement so that everyone can plan accurately for retirement.
Under the new system, pensioners would in time receive around £150 a week or over if they have 35 years of full-rate National Insurance contributions, but those soon to retire will need to check what it means for them, with transitional arrangements in place as the system switch over.
A new multi-channel advertising campaign entitled ‘Your Pension, Your Future’ begins today – part of an effort to explain the reforms and how they can get the most out of it.
The launch coincides with the publication of new research carried out on behalf of DWP which confirms the lack of understanding many people have about the British State Pension system.
Some 42% of people yet to retire admit they need to find out more about saving for retirement, while 38% concede they “try to avoid thinking about” what will happen when they stop working. And only 60% of all adults surveyed realise it is possible to take action to increase their State Pension.
Work and Pensions Secretary Iain Duncan Smith MP said:
The new State Pension is one of this government’s boldest reforms; it will give people clarity over their retirement income, significantly reduce the means testing of pensioners and put right inequalities affecting women, low earners and the self-employed.
It’s of paramount importance that people have confidence that planning for their future and saving into a pension is a worthwhile enterprise.
This campaign is all about making sure people understand what the changes mean for them personally: which is greater financial security and a more positive future. All part of our long term economic plan.
Pensions Minister Steve Webb MP said:
Arriving in April 2016, the new State Pension will help create a simplicity that hasn’t existed in decades. It will give workers the knowledge that there is a strong foundation upon which they can build their savings. This is a real game changer.
Delivering this reform is a fundamental part of this coalition government’s mission to create a fairer society. But to achieve its aim, people need to know what it means for them and be able to plan their own pension saving accordingly.
As well as explaining how the reforms will affect future pensioners, the new campaign also seeks to reassure current pensioners – and those who retire before April 2016 – that they will not lose out. They will remain in the current system and will continue to receive the same basic State Pension, which because of up-ratings delivered during the course of this Parliament, is now at its highest level relative to earnings than at any point since 1992.
The new campaign includes press, radio and online advertisements, as well as a significantly enhanced package of online information at GOV.UK to help people find out more.
To ensure fairness, transitional arrangements will be in place to ensure National Insurance contributions made by those who have spent some of their working life in the old system are recognised. This will involve the DWP calculating a ‘starting amount’ for the new State Pension based on a person’s record up to April 2016.
Today’s campaign launch follows the introduction last month of a new bespoke statement service giving people information about their starting amount and what they may be able to do to increase the level of their State Pension before they retire. Initially available to people within 5 years of retirement, this service will be expanded on a month-by-month basis.
Already, more than 18,000 people have received a statement.
The research was conducted by Ipsos MORI on behalf of DWP, based on 2,212 face-to-face interviews with GB adults aged 22 and above (of which 1,443 were yet to retire), between 4 July 2014 and 24 July 2014. Data are weighted to reflect the national population profile. Read the Ipsos MORI State Pension research.
Media enquiries for this press release – 020 3267 5123
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