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Digital caution laid ground for state pension success

03/11/16

NAO report says holding back a more ambitious plan enabled the DWP to manage transition successfully – but that changes cannot be put off indefinitely

The Department for Work and Pensions (DWP) has successfully managed the introduction of a new state pension, largely by adapting existing IT rather than rushing in with a more ambitious solution, according to central government’s auditor.

State pension checker screenshotThe National Audit Office has issued a report on the transition that applauds the DWP for introducing the new pension – in which claimants have their entitlement calculated according to new rules – by April 2016, a year ahead of the original target date.

This was achieved by making the minimum necessary changes to the IT systems, bringing the project in within its budget at a cost of £57 million up to March of this year.

The move has the pensions service on track to handle the 407,000 new claims expected for 2016-17.

But the cautious approach has meant the DWP has not yet introduced a new digital claims service that would enable people to check a statement of their entitlement, make a claim and report changes in circumstances online.

The digital service for making a claim is now expected in April 2017, and that for change of circumstances in 2018.

HMRC data effort

Alongside this, HM Revenue & Customs has been checking its national insurance data to align it with that of pension schemes, which should provide for more accurate initial assessments – but progress has been slow. There has also been some deterioration in the time taken to process claims.

In addition, the NAO says it is not yet clear whether the simplification of the state pension will support wide pension reforms. One of its objectives has been to prompt people to begin planning for their retirement at a younger age, but there is not yet any evidence that this has been a result of the change.

Amyas Morse, head of the NAO, said: “The department’s implementation of the new state pension so far represents value for money. Reforming pensions is, however, a long term endeavour.

“The department has yet to reintroduce its plans for the digital administration of pensions, and achieving the longer term objectives of the new state pension will depend on how it interacts with wider reform of the pensions system. Both these key areas will need to be tackled to achieve value for money as the reforms develop.”

Image from GOV.UK, Open Government Licence v3.0

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