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24 Dec 2014

Labour: Pension Reforms Are Bewildering

A recent study has revealed that people are wrongly expecting to be better off in their retirement as a result of the new pension reforms, causing some to say that they have been ‘over-hyped´, the Financial Times reports.

As of April 2016, a ‘single-tier´ pension of £151 per week will come into force, replacing the current basic state pension of £131 per week. Although this has been described as being more generous by the Prime Minister himself, some savers will be headed for disappointment as they will in fact receive a smaller state pension in the future.

To gage how those over the age of 50 were perceiving the changes, the FT and Populus conducted a survey of more than 10,000 UK savers. It was found that more than two-thirds (35%) believed that the single tier pension would be more generous on average; while a similar number (34%) were said to be unsure. Of those aged 50-59 - supposedly the most critical age group - some 39% were unsure.

This, says Saga´s Paul Green, also “shows the power of spin over substance”. Shadow pension minister Gregg McClymont agrees, noting that the “worrying results of this survey confirm that rather than having more confidence in the state pension, savers are bewildered by the government´s policy.”

“The government must be open and honest with the public about the losers as well as the winners from the move to a flat rate state pension,” he added.

However, the Department for Work and Pensions (DWP) has denied that ministers have exagerrated the advantages of the reforms; despite launching a campaign this month to raise awareness of the changes. It argues that it always been consistently clear “that reform of the state pension is about spending money more fairly and effectively, not about spending more money.”

Prime minister David Cameron has so far stood by his statements regarding the reforms.

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