Hundreds of thousands of retirement savers have planned their state pension spending based on the wrong figures, a red-faced minister has admitted.
At least 360,000 state pension forecasts dished out over the past 36 months were out by up to £1,500 more than expected, confessed Pensions Minister Guy Opperman.
The blunder is the result of an error in the Department of Work and Pensions online site and a major embarrassment for the government, which wants to make more services digital.
The minister admitted the error in a letter to former pensions minister steve Webb, now a director of financial firm Royal London.
“Analysis has identified that currently no more than 3% of people will be impacted by the issue you have raised,” Opperman said.
“It is also important to note that omission or errors will be rectified before they retire. However, I nonetheless recognise there is a significant problem here.”
Pension experts have long suspected the online state pension forecast posted false results.
The DWP launched the service in 2016, claiming the checking service was “the go-to way for people to easily find out how much they could get, and when they could get it”.
Although more than 12 million forecasts have been issued, meaning around 360,000 are suspected wrong.
“People are increasingly encouraged to use online services to help plan their retirement, and the new pensions dashboard will rely heavily on such data,” said Webb.
“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 based on incorrect information.
“Now that the government is aware of the scale of the problem, it must put an urgent stop to the issuing of incorrect statements.
“Individuals need to have confidence that the information they receive from the government is accurate and should not have to live with the uncertainty that a statement they have already received may be seriously incorrect.”
Opperman indicated people belonging to defined benefit pensions with ‘complex’ work histories are most at risk of having incorrect forecasts.
Although accuracy rates are improving, the minister says that more work will now be done to try to improve the results.