New state pension shambles: Millions are livid because they're not getting what they were promised - and it's so complex even experts are baffled

New state pension supposed to be flat rate of around £151.25 a week
Thousands received statements confirming pension payment reductions
Government frantically trying to find clearer way to explain new system
Leading actuaries admit even they are confused by the figures
Savers urged to contract out of second pensions in 1980s now penalised

By James Coney and Ruth Lythe for the Daily Mail

Published: 18:38 EST, 15 September 2015 | Updated: 04:43 EST, 16 September 2015

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The government's flagship plan for a new flat-rate state pension is in chaos as millions of workers are discovering they have been misled by the promise of a better retirement.

From April 6, the current basic state pension of £115.95 a week will be replaced by a new payout that ministers pledged would leave many better off and put an end to the complicated system of credits and top-ups.

The new state pension was supposed to be a simple flat rate of around £151.25 a week.

Pensions chaos: Millions of workers are discovering they have been misled by the promise of a better retirement

But with just 204 days to go, tens of thousands of workers approaching state pension age have received statements showing they will have huge amounts docked from their weekly payment because at some point in their careers they contracted out of the state second pension, also known as Serps.

In some cases, the deductions mean they will receive just a few pence more than the current basic state pension.

Worse, when they seek an explanation from the Department for Work and Pensions (DWP), they are left baffled. And the sums used to calculate the deductions are so confusing, they cannot even challenge them.

Incredibly, leading actuaries admit that even they are confused by some of the forecasts savers are given.

Many complain the new system is unfair and that friends and family who have worked for fewer years and paid thousands of pounds less in National Insurance will now earn a larger state pension.

And, crucially, they feel cheated because the Government never fully explained how the new state pension would work.

Revelations: In June 2014, we revealed that just 58 per cent of those retiring would get the full payout — forcing then pensions minister Steve Webb (pictured) to apologise

Money Mail understands that ministers are frantically trying to find a clearer way to explain the new state pension to savers — but they, too, have been stumped over how to do it.

In the meantime, statements sent to savers are set to be scrapped amid accusations they are misleading. Many workers have complained of ‘missing money’ and that call centre staff can’t explain exactly how and why money is being docked.

Money Mail also understands that a new computer system is expected to be unveiled to help workers, but not until after the new state pension is introduced in April.

On top of this we can reveal how civil servants will continue to be winners under the new system, by being allowed to build up extra pension despite paying a lower rate of National Insurance for decades.

And in a final blow, private pension savers who were urged by the Conservative government to contract out of the state second pension in the Eighties and Nineties now face being penalised for the decision.

Today’s major investigation — on the next pages — is the latest in a series of worrying revelations about the new state pension.

Scandal: Civil servants will continue to be winners under the new system, by being allowed to build up extra pension despite paying a lower rate of National Insurance for decades

In May 2014, we first reported how the new state pension would not be a flat rate — as savers had been led to believe — and that millions would miss out on the full payment.

In June 2014, we revealed that just 58 per cent of those retiring would get the full payout — forcing then pensions minister Steve Webb to apologise.

Then, in July this year, we reported how the numbers set to claim the maximum amount had fallen even further — now only 37 per cent would get it.

Last week, we exposed how in the first three years of the new flat rate, just 80,000 women of the 1.2 million people due to retire will get the full £151.25 a week.

And on Saturday, we revealed how the average worker who had contracted out of the state second pension would have £55 docked from their new state pension payout.

Malcolm McLean, a consultant for actuarial firm Barnett Waddingham, says: ‘As we get closer to the start date, the new single-tier state pension is turning out to be a big disappointment to many people.

‘From the outset this was described by ministers as a more generous, easier to understand, flat-rate pension, none of which in the short-term now appears to be the case.

‘Yes — there are some winners from the new arrangements, but there are a lot of losers as well.

‘Communications from the DWP explaining the new arrangements have been especially poor.

‘The big worry is that many people who are expecting a full state pension of £151.25 a week or more, will find out too late they are going to fall well short of that figure, and will suffer as a result.’