Guy Opperman has admitted incorrect state pension forecasts have been issued for a third of a million people since 2016 with defined benefit (DB) members with “complex” work histories facing a “significant problem”.
In response to a letter sent by former pensions minister and Royal London director of policy Sir Steve Webb last month, Opperman noted members that have transferred between DB schemes may find there is a difference between their online forecast and any paper forecast they receive.
According to government data, since 2016 some 12 million state pension forecasts have been issued, but 3% of those may be erroneous because of problems with HM Revenue and Customs (HMRC) data.
The issue came to light after This is Money, working with Webb, identified members receiving incorrect or inconsistent forecasts. These were then raised with the Department for Work and Pensions (DWP) which initially said these were isolated errors which have now been corrected. In some cases new forecasts were more than £1,500 a year than had previously been expected.
Opperman’s letter said that, for the paper version of the forecast, DWP staff have intervened to ensure it is correct.
“When this happens, we work with HMRC to update their work history and provide a revised state pension forecast,” he wrote. “The correction of their record as a result of this means their on-line record will be accurate for the future.”
The letter also noted that HMRC records can “never be perfect”, and added there will always be a “residual level of error in the system”, but that progress is being made with this.
Opperman added: “Work continues to increase the level of data accuracy. Importantly no one will receive an incorrect amount of state pension.”
The letter also outlined that Opperman has asked officials to explore options to further enhance the accuracy of the information held in National Insurance records, and how it uses this information to calculate state pension forecasts.
Webb said: “People are increasingly encouraged to use online services to help plan their retirement, and the new pensions dashboard will rely heavily on such data.
“It is therefore very worrying that hundreds of thousands of people may have received incorrect state pension forecasts and in some cases will have taken decisions about their retirement plans on the basis of incorrect information.”
He called an “urgent stop” to the issuance of incorrect statements, noting “individuals need to have confidence” in the information they receive.