Almost 400,000 people have been issued incorrect state pension forecasts online stating that they’ll be given a higher amount than they’re actually entitled to, according to a new investigation.
Of the 12m forecasts sent out since 2016, an estimated 3% of workers would have received incorrect details of their state pension. This equates to just over 360,000 individuals who may have started planning their retirement using the wrong figures.
In some cases, people’s state pension forecasts were more than £1,000 a year higher than their actual entitlement, according to findings from Sir Steve Webb, director of policy at Royal London and This is Money.
After Mr Webb wrote a letter to the Department for Work and Pensions (DWP) addressing the issue, minister for pensions, Guy Opperman, admitted that there are ‘significant problems’ that needed to be resolved.
It’s not the first time that administrative errors have affected people’s state pension entitlements and in some cases have caused people to suffer cuts to their state pension payments.
Here, we explain which workers are at risk of being affected and how to check how much state pension you’ll get when you hit state pension age.
Who’s at risk of being affected?
In a written response, Guy Opperman indicated that people who were members of a defined benefit pension scheme with ‘complex’ work histories had the greatest risk of receiving an incorrect state pension forecast.
‘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,’ he wrote.
The minister recognised that there were significant problems with the errors.
Opperman wrote: ‘Analysis has identified that currently no more than 3% of people will be impacted by the issue you have raised. Omission or errors will be rectified before they retire. However, I nonetheless recognise there is a significant problem here.’
Read Guy Opperman’s full response in the letter below.
The DWP is taking action to work with HMRC to resolve the issue swiftly.
A spokesperson from the DWP told us: ‘We are aware that a small proportion of online state pension forecasts may have been affected by errors.
‘We apologise to those affected for the inconvenience. Our officials are working urgently with HMRC to make sure this problem is resolved as quickly as possible.’
- Find out more: how pensions work
What to do if your state pension forecast is wrong
If you think your online state pension forecast may be incorrect, the best thing to do is request a written statement in the post for an accurate estimate.
Sir Steve Webb told us: ‘The public expect information sent to them by the government to be accurate.
‘Now that the DWP is aware that three in every 100 statements they issue is incorrect, they need to think seriously about whether to continue the current service as it stands and how long it would take to get accuracy up to a more acceptable level.
‘People with older paper-based statements should find that they are accurate because officials manually corrected the problem, but the newer online statements have not been corrected.
‘With a pensions dashboard coming down the track, a lot of work is going to be needed on both state and private pension data to give consumers confidence that the information they are seeing is accurate.’
- Find out more: state pension age calculator
What is the state pension?
The state pension is a weekly payment from the government that you can receive once you reach state pension age.
In order to qualify for the state pension, you need to make National Insurance contributions. You’ll need to have a minimum of 35 qualifying years to get the full amount of new state pension and at least 10 years’ worth of contributions to get anything at all.
Workers who reached state pension age before the new state pension was introduced only need 30 years’ worth of National Insurance contributions to get the full basic state pension.
- Find out more: what is the state pension?
How much state pension will I get?
In order to qualify for the state pension, you have to make National Insurance contributions.
If you reached state pension age before April 2016, you’ll be entitled to the basic state pension plus any additional state pension you might have built up.
If you hit state pension age after April 2016, you’ll receive the new single-tier state pension and will need at least 35 years’ worth of contributions to get the full amount.
We’ve rounded up the state amounts you could be entitled to:-
- New state pension: If you’re entitled to the full new single-tier state pension, your weekly payments will increase from £164.35 to £168.60
- Basic state pension: Those receiving the basic state pension will get a weekly boost of £3.25 a week – taking the total state pension from £125.95 to £129.20.
- Additional state pension: The maximum additional state pension cap will increase from £172.28 per week to £176.41 per week
How do I check my state pension?
To check your state pension entitlement, you’ll need to get a state pension forecast.
To do this you’ll need to use the state pension forecast service ‘Check your state pension‘, which is available on gov.uk or via the Personal Tax Account.
The service is designed to help you identify:
- How much state pension you could get
- When you can get your state pension
- How to increase your state pension, if possible
Further details about your state pension breakdown can also be provided by the Future Pension Centre of the DWP.
Check out our comprehensive state pension guide for more information and advice.