July 17th, 2019
Pension Minister Admits Significant Problem with Incorrect State Pension Forecasts
In a recent letter to Royal London policy director Steve Webb, Pensions Minister Guy Opperman has recognised there is a “significant problem” with online state pension forecasts, leading many people to believe they will receive a higher state pension than they are due.
Over 12 million state pension forecasts have been issued since 2016 and 3% of those may be false because of problems with HM Revenue & Customs data. This equates to more than 360,000 people who may have started planning for their retirement using the incorrect information.
The issue came to light when members of the public reported receiving online forecasts that were inconsistent with previous statements with some reporting calculations more than £1,500 a year higher than previously expected.
Mr Webb wrote to the Pensions Minister and asked him to undertake a root cause analysis of the issue to determine whether there was a systematic problem.
Opperman wrote: “Analysis has identified that currently no more than 3% of people will be impacted by the issue you have raised. It is also important to note that omission or errors will be rectified before they retire. However, I nonetheless recognise there is a significant problem here.”
He continued “Those with a particularly complex work history, where they have transferred between defined benefits schemes, may find that there is a difference between their online forecast and any paper forecast they receive, as was the case in the example you provided,”
The minister explained that in these cases, where the online version has had an error, staff have intervened to ensure the paper version is correct but recognised the need to “continue to improve data quality”.
“Therefore, I have asked officials to explore options to further enhance the accuracy of the information held with National Insurance records and how we use that information to calculate a person’s State Pension Forecast,” Mr Opperman wrote.
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Written by Kay Crooke – Associate Practice Director at Prosser Knowles Associates Limited.