Overview
- The Work and Pensions Committee published a report saying the DWP's online forecasting tool, introduced in 2016, produced overstated state pension estimates and the committee has called for compensation for up to 800,000 people.
- DWP officials acknowledge they became aware of the 'contracting out' fault around 2017, say the online tool has now been fixed, and have promised to respond to the committee's recommendations.
- About 360,000 users have already been confirmed as receiving incorrect forecasts and some estimates put the upper bound of those affected at roughly 800,000 people who may have made life decisions based on wrong figures.
- Chancellor Rachel Reeves has pledged to exempt pensioners whose only income is the state pension from income tax but HMRC says primary legislation is required and experts warn the narrow exemption could create unfair outcomes.
- Separately, the DWP is rolling out major pension reforms — a Value for Money framework, automatic consolidation of small pots, default retirement income options and size thresholds for large funds — staged from 2028 to 2030 and aimed at boosting savers' returns by up to about £29,000 over a lifetime.