The six months following the launch of the new state pension in April has seen more than 1.5m personal state pension forecasts issued, according to the Department for Work & Pensions (DWP).
By way of comparison, 860,000 forecasts were issued in the 12 months previous to the reforms. With four-fifths of the forecast requests viewed online, the DWP suggested the trend highlighted how consumers were welcoming the opportunity to access pension information quickly and “in real time”.
AJ Bell senior analyst Tom Selby argued, however, it was essential to be able to access forecast information on state pensions because they were the “bedrock upon which savers’ retirement futures are built”.
He continued: “While the new flat-rate state pension for future retirees of around £155 a week is fairly straightforward to understand, the old system under which many people accrued benefits was riddled with complexity. This means some people reaching state pension age in the coming years will be entitled to more than the flat-rate amount – and some to a lot less.
“Furthermore, the full flat-rate state pension amount is only available to those who build up 35 years of National Insurance [NI] contributions, with a minimum of 10 years needed to get anything at all. You can also get NI ‘credits’ if you are not in full-time employment.”
State pensions have been under scrutiny recently, with suggestions for improvements coming from all sides. Last week, Selby blasted the Centre for Policy Studies for proposing the state pension age effectively increase to 80, suggesting there would be “riots in the streets” if such a drastic change were to be implemented.
Hargreaves Lansdown, on the other hand, recently argued those with evidence of poor health should be able to access their state pensions as young as 60. The firm’s head of retirement policy Tom McPhail said the proposals would help prevent the state pension becoming “unsustainably expensive”.
Winners and losers
Commenting on the high level of demand for pension forecasts, Aegon head of pensions Kate Smith said the recent spotlight on pensions had been good for engagement, despite there being both winners and losers from the latest reforms.
“The state pension changed dramatically in April this year, and there has been a concerted push to get the news out to those most affected,” she said.
“Yes, there have been winners and losers, but there’s no denying the spotlight on pensions has been good for engagement. It’s wonderful to see that more than 2% of the UK population have checked their state pension forecast in the last six months, a massive uplift, and a trend we hope will continue.”
She added: “Everyone has a different National Insurance history, so it’s vital that people know early on if there are gaps that need filling. Some may be disappointed, while others are pleasantly surprised, but the important thing is finding out where you stand while you still have time to act.”
Pensions minister Richard Harrington (pictured) said: “Not only is the new state pension system simpler, but it’s now easier than ever before for people to find out what they can expect to receive when they retire.
“Just as we’ve seen more people using online banking, so too people are welcoming the opportunity to take more control over their state pension.”
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