Minister admits ‘significant’ problem amid concerns over state pension forecasts
There is a “significant problem” with errors in state pension forecasts, the Pensions Minister has admitted.
People with a complex work history may in some cases find there is a difference between their online forecast and any paper forecast, Guy Opperman said – although levels of accuracy are improving and mistakes are corrected before people retire.
He made the comments in a letter responding to former pensions minister Sir Steve Webb, who is now director of policy at Royal London.
Some 12 million state pension forecasts have now been checked online by people who are planning for retirement, according to figures from the Government.
But Sir Steve said people have reported receiving online statements about their pension which do not match up with written statements – with the online statements being incorrect.
He said the incorrect statements often over-estimated what people would receive.
Sir Steve said work in partnership with the This Is Money website had found that, in some cases, inaccurate forecasts were £35 per week higher than the accurate amount.
Mr Opperman said he has asked officials to explore options to further enhance accuracy.
In his letter, the minister said the Department for Work and Pensions (DWP) has worked with HM Revenue and Customs (HMRC) to strengthen the quality and accuracy of state pension information to ensure that the online tool Check Your State Pension operates an optimal customer service.
He said: “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.”
Mr Opperman said that, in cases where there is a difference between paper and online forecasts, records are updated to make sure they are accurate for the future.
He continued in his letter to Sir Steve: “As a former pensions minister I am sure you will recognise that HMRC records can never be perfect – there will always be a residual level of error in the system.
“But we are making progress with this; HMRC have increased the accuracy of National Insurance records and reduced the number of cases requiring corrective action in advance of state pension age from 10% of claims in 2013-14 to 3% in 2018-19.
“Work continues to increase the level of data accuracy. Importantly, no-one will receive an incorrect amount of state pension.”
Commenting on the letter, Sir Steve said people are increasingly encouraged to use online services to help plan their retirement.
“It is therefore very worrying that hundreds of thousands of people may have received incorrect state pension forecasts and in some cases will have taken decisions about their retirement plans on the basis of incorrect information,” he said.
“Now that the Government is aware of the scale of the problem, it must put an urgent stop to the issuing of incorrect statements.
“Individuals need to have confidence that the information they receive from the Government is accurate and should not have to live with the uncertainty that a statement they have already received may be seriously incorrect.”