The union says people have been continually under-informed about the impact of the government’s changes.
In his 2013 Budget statement, the Chancellor claimed that the new state pension would help the low-paid.
In fact the outgoing state pension system would have provided a higher pension to a low-paid individual who is contracted-in to the state’s second pension over a full working life.
Prospect pensions officer, Phil McEvoy said: “George Osborne sold the country a pup when he claimed that the new state pension would help low earners.
“Although simplifying state pensions was long-overdue, it is wrong that it is being used as a cloak that will see the taxman get more while paying less to future pensioners.”
As the details of the new system continue to unravel, the government is overseeing change that will increase revenue through higher National Insurance but longer-term expenditure on state pensions will fall.*
Many people will get a lower income in retirement because of cuts to entitlements that have already been built up.
A central tenet of pensions provision is that individuals should not face reductions to what they have already earned.
Although government has taken steps to ensure that most earned entitlements are protected, many future retirees with a “Guaranteed Minimum Pension” entitlement will see the value of this reduced as the Treasury will no longer meet the cost of annual increases to this benefit.
“All of this comes alongside the fiasco of State Pension Age reform that has left so many women aggrieved and could potentially see future generations having to work until they drop.
“Working people need to be aware of the impact of government’s changes on their retirements. We welcome the committee’s proposals to provide automatic, regular, individual statements,” McEvoy concluded.
* The impact assessment [https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/311316/pensions-act-ia-annex-a-single-tier-state-pension.pdf] accompanying the law that introduced the pensions reforms confirmed that:
expenditure on state pensions is set to drop for future generations of pensioners (Annex C)
National Insurance payments will increase (paragraph 6.3)