Will new S Pension cause resentment?

ipri · 15 October 2016 at 2:12PM

Will people who get the new SP not be a source of resentment from those who , if I'm correct, will receive less?

zagfles · 15 October 2016 at 2:32PM

ipri wrote: »

Will people who get the new SP not be a source of resentment from those who , if I'm correct, will receive less?

Who are you thinking about? The answer is yes it will and has already - including several threads here in MSE. But ironically it seems those who complain the loudest seem to be the utterly clueless who don't understand the changes and who think they're losing out but in fact aren't!

For instance there seems to be a lot of ignorance that the new state pension replaces both the old basic state pension and the SERPS/S2P earnings related element. For most people the old system was more generous.

Then there are those who don't understand that their company pension was contracted out of SERPS/S2P and so part of their company pension was paid for by NI rebates, and that together with the basic SP gives more than the new state pension.

There are some groups who are much better off with the new state pension, for instance the self employed. Also those who have been contracted out and have 5-10 years more to work do pretty well. But it's likely that most people who retire under the new state pension will get less than they would have if the old system had carried on.

ipri · 15 October 2016 at 2:53PM

Thanks...just to be clear, I'm interested, not complaining. Example. I started work aged 15...worked till 60. Now get old pension. Best friend came to England mid 70's ( mid 20's) worked till 58.( Retired early). He now gets new pension...has many years less contributions than me...but qualifies because cont. period has been lowered.

zagfles · 15 October 2016 at 2:59PM

ipri wrote: »

Thanks...just to be clear, I'm interested, not complaining. Example. I started work aged 15...worked till 60. Now get old pension. Best friend came to England mid 70's ( mid 20's) worked till 58.( Retired early). He now gets new pension...has many years less contributions than me...but qualifies because cont. period has been lowered.

Yes but who gets more (taking into account SERPS/S2P/any contracted out employer/private pension)?

The contribution period for the old basic state pension was lowered in 2010 to 30 years. That was under the old system. Did you reach state pension age before then?

Silvertabby · 15 October 2016 at 3:06PM

I knew about the contracted out deductions right from the start, because I've never been one to just read the newspaper headlines.

I am comfortably retired (at 60) due to my contracted out occupational pensions. If I don't pay voluntary NI, I expect my State pension at 66 will be in the region of £120 per week.

Do I resent that I won't get the full £155 per week? Not at all. I know some people are saying that they would have been better off not joining their employer's pension scheme, as they would get the full £155 per week, but that's just ridiculous. Just who's the better off - someone retiring at 60 with a £120 top up at 66, or someone who has to work until 66 and then have to live on just £155 per week?

ipri · 15 October 2016 at 4:18PM

Rtrd May 2010....NHS

dunstonh · 15 October 2016 at 4:21PM

The state pensions have been reduced about 5 times over the last 3 decades. The qualification has changed as well. There is no point being resentful of other generations. We have things they dont and vice versa.

People who are 60 today have similar health to those that were 40 in the 1970s. They are likely to be paid their state pension much longer than those in the past, even though the state pensions used to be higher (on full qualification).

molerat · 15 October 2016 at 4:32PM

Yep. Someone receiving the old £260 a week will be resentful of someone receiving £155 .......... maybe not

bowlhead99 · 15 October 2016 at 4:42PM

ipri wrote: »

Will people who get the new SP not be a source of resentment from those who , if I'm correct, will receive less?

Generalising, all pensions (state or workplace), welfare benefits, salaries, asset price rises etc etc, are potentially a source of resentment from those who will receive less. That happens if people are envious and resent what they don't have for themselves, and it is a personality trait which is held by many.

My dad has the state pension for those reaching the requisite age pre April 2016. I will get the one for those reaching the age after April 2016 and it may change again before I get there (currently slated for age 67, while Dad was at 65 and Mum at 60).

If I was allowed to retire under the old rules I would have had a bigger pension than under the new rules because under the new rules I won't be able to get more than £155ish (in current year terms) even if I have 50+ years of non-contracted-out contributions, while under the old rules I would have been able to get to £200 plus.

Will my Dad be resentful of me for being landed with a deal that only allows me to get a smaller amount of money from the state per week than he was allowed to get, and from a later age? Seems pretty unlikely that he would resent me getting that deal, because I'm getting less. Maybe he will instead be resentful that I might get to live longer than him because of improving healthcare and longevity through the generations. Should I take action to worsen my health to make sure I don't?

Probably we are better as a society if we don't resent what others have. Instead focus on making the best of what we have and helping others rather than being envious of others.

zagfles · 15 October 2016 at 5:15PM

ipri wrote: »

Rtrd May 2010....NHS

If that's when you reached SPA then you only needed 30 years for a full basic state pension (old rules) at that time. It changed in April 2010.

The NHS pension was contracted out so instead of SERPS/S2P you'd have got the equivalent as part of your NHS pension paid for by NI rebates. This element of the NHS pension would almost certainly be more than the difference between the full new state pension and the old basic state pension.

dunstonh · 15 October 2016 at 5:56PM

Rtrd May 2010....NHS

Why would you be resentful of those retiring under the new scheme? You had a shorter qualification period and your NHS pension is superior to the one that new entrants get. Plus, you paid lower class 1 NI over your working life.

Will new S Pension cause resentment?

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