State pension reforms: ​Millions stillclueless about entitlements

The pace of pension change has been so quick that it’s understandable that many people have little idea how much they may have to live on when they retire, says Simon Read​

Just 15 per cent of those over retirement age say they could live of the state pension alone (Getty)

The good news is that the new state pension finally launches next Wednesday. The not-very-surprising bad news is that few of us have any idea what it means or how much our payout might be when we retire.

New research published today by Which? reveals that almost half of 50 to 64-year-olds don’t know what the full rate of the new state pension will be from 6 April.

The fact is that the full new single-tier state pension will be £155.65 a week. But who will qualify for that? For starters, if you’ve ever been contracted out from the state pension – even for a short period of time – you could end up with a much smaller pension than you are expecting.

Many people were advised to contract out in the late 1980s in exchange for lower National Insurance contributions. An estimated 5 million people did so, encouraged by government incentives. But that will hit their future state pension payouts.

You’d assume that people would be aware of whether they ever contracted out of the state pension but, according to the research, less than one in five people know.

Shockingly only a fifth knew that the new rules do not affect those who reached state pension age before April 2016, while a similarly low percentage knew that the state pension age will be 65 for both men and women in November 2018.

The pace of pension change has been so quick in recent years that it’s understandable that millions have little idea how much they may have to live on when they retire.

“More needs to be done to make sure that people understand what the changes are and what they mean for them,” said Richard Lloyd of Which?

Meanwhile Pensions Minster Ros Altmann, said: “It is vital that people check what their state pension is likely to be.”

That’s good advice, but a little late for the many who will end up with a lower income than they had been led to expect when they retire.

I’ve written often in the past about the campaigners from Women Against State Pension Inequality who believe that hundreds of thousands of women have been misled by successive governments about their payouts and when they qualify for the state pension.

But I suspect that there will be many more – men and women – who will be surprised to end up with less retirement income than they expect to get. And that means the Government must work harder to ensure that people have enough information about their future finances, or lack of them.