The new state pension system was introduced in 2016 and is inflation proof (Image: Getty)
Up to 10 million UK savers may be £20,000 worse off because part of their was not linked to inflation.
People who contracted out of the to join their employer’s defined benefit scheme between April 6, 1978, and April 5, 1997 are those affected.
When this happened the element of their pension, known as was not indexed with a cap at 3%. This is what is known as post 1988 GMP.
The issue is only believed to affect those in private final salary – defined benefit – schemes as those in public sector schemes had the GMP part of their pension inflation linked.
Anyone who retired on and after April 6, 2016, could be affected by the change.
A campaigner who did not want to be named pointed out that the issue only affected those in private schemes as those in public sector schemes had the GMP part of their pension inflation linked so they didn’t miss out on any inflation rises.
A spokesperson said anyone who is concerned needs to read the online factsheet on the changes – the – and contact the department if they think they have been affected.
The spokesman added: “These changes only affect people who reached age from April 6, 2016, who can benefit from the transitional rules of the new .”
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The added that the new system was introduced in 2016 to provide a sustainable, clear foundation pension for people to build their private savings on top of. No one who qualifies for the new will receive less than they would have done under the previous system, based on their National Insurance record up to April 6, 2016.
“The factsheet describes the factors involved in this complex policy area and invites people to contact the Department if they want to know how they have been personally affected by the policy change.”