49.The Government recently announced the first periodic review of the state pension age, which will consider changes after April 2028. The Government expects to announce an acceleration of scheduled increases:
the increase in the State Pension age to 68 is likely to come forward from the current date of 2046 to the mid 2030s, and [ … ] the State Pension age is likely to increase further to 69 by the late 2040s.
As the Government will report on the review by May 2017 it is likely to be able to have the opportunity to honour its pledge to give individuals affected 10 years’ notice of any change.
50.The Pensions Act 1995 legislated for state pension age changes at least 15 years before they took place. As we have established, however, many people affected by the changes “were not given vital information about their state pension age until it was too late for them to change their plans”. Prospect told us that it was “continually surprised at the lack of awareness of planned increases to State Pension age, and of requirements to keep this under review”.
51.Over the course of our inquiry, we have heard many calls for increased personalised, targeted and proactive communications from the DWP with regard to the new state pension. Hargreaves Lansdown expressed concern that “the DWP has failed to learn the lessons of its communication failure in respect of the rise in women’s state pension age and may be in danger of repeating the same mistakes all over again”. The Department, however, highlighted recent improvements to its targeted new state pension communications, including a potentially revolutionary digital statement service. We will soon consider communications of the new state pension in a separate report.
52.As well as finding communication of state pension age increases had been sparse, we found that data regarding awareness of those changes was also scant. With regard to the new state pension, Age UK called for “more in-depth research on people’s awareness and understanding” of policy changes. This applies more widely. An understanding of the effectiveness of communication campaigns is fundamental to adapting them effectively.
53.Finally, better understanding of, and greater engagement with, retirement finances is not just a necessary component of state pension changes; it is fundamental to the Government’s ambitious wider programme of pensions reform. Aegon UK told us:
Greater clarity will enable individuals to be in a better position to plan for their retirement, exercise their freedoms and understand better if they need to make higher private pension contributions to achieve the total retirement income they aspire to.
54.The state pension age will inevitably rise again. Passing legislation in good time is does not constitute sufficient notice. Governments must ensure that those affected are contacted directly to explain the effects on their individual circumstances and that there is widespread advance communication of the changes. Furthermore, they must regularly monitor awareness and adjust personalised and general communications accordingly.
55.The Government’s pensions strategy is predicated on people better engaging with financial planning and saving for retirement. This requires greater public understanding of what can seem arcane and distant concerns. By adopting more engaging, innovative and adaptable communications and awareness-raising campaigns, this and future Governments can better support policy objectives and potentially reduce costs.
82 HM Treasury, , Cm 8747, December 2013, para 1.123
83 (Baroness Altmann)
84 Hargreaves Lansdown ()
85 Prospect ()
86 For example, Hymans Robertson (); Aegon UK (); Savvywoman.co.uk ()
87 Hargreaves Lansdown ()
88 DWP ()
89 (Baroness Altmann)
90 Age UK ()
91 Aegon UK ()
Prepared 15 March 2016