Govt white paper details

Milarky

http://money.guardian.co.uk/pensions/story/0,,1780264,00.html

As often predicted, they will start raising the pension age (from 65) after 2020 - carrying on from the date of full equalization of men and women. (So no surprises there then.)

Meanwhile, the scorecard of 'private industry' on pensions scarcely looks any better:

Employers have been resisting the proposal for compulsory contribution, but the white paper suggests 988,000 employers are either offering no help to staff pensions, or contributions of less than 3%.

Does anyone feel, like me, that these proposals are utterly timid and almost useless?

Little bit of an update:
http://www.guardian.co.uk/comment/story/0,,1780085,00.html

Of course, there is "bad news" - and most headlines will probably focus on the raising of the state-pension age to 68, in stages, by 2050.

From this (still unconfirmed but obviously briefed account) we can see that the age of the pension will thus go:

Year................ Men...................Women
2010.................65........................60
2012.................65........................61
2014.................65........................62
2016.................65........................63
2018.................65........................64
2020.................65........................65
2030.................66........................66
2040.................67........................67
2050.................68........................68

(With ages being 'interpolated' for each year inbetween I imagine)

EdInvestor

Mail

There's one particular change which will help people now.You'll only need 30 years' NI contributions for the full basic pension, down from 44 for men and 39 for women.

And if you're a carer, you can get full NI credits for the pension after 20 hours work, compared with 35 now.

margaretclare

EdInvestor wrote:

Mail

There's one particular change which will help people now.You'll only need 30 years' NI contributions for the full basic pension, down from 44 for men and 39 for women.

And if you're a carer, you can get full NI credits for the pension after 20 hours work, compared with 35 now.

Hi Ed

This will help people whose NI record isn't quite complete, and it will particularly help women. But it won't do anything at all for those women who chose to pay the married women's reduced contribution, and who continued to pay it after April 1978.

There are still a lot of women in the early retirement years, or not yet retired, who fall into this category.

I know, I know....I despair, I did at the time, how any woman could be so blinkered as to make that very unwise decision beggars belief - but the fact remains that very many did and a lot of them are just coming up to retirement now. The fact that a lot of them made this choice is borne out by the recent statistic that only 30% of us retired women get full SRP in our own right.

Margaret Clare

CIS

The problem is how will the 30yrs be handled ?

I can see a hell of a lot of problem sif people can gain a full pension after 30yrs but still need to work until 65 minimum to claim it, it means that in proportion more people are getting more out for puttingf less in.

I think it has the potential to go wrong and leave the system in exactly the same financial crisis as it does now.

Milarky

margaretclare wrote:

Hi Ed

This will help people whose NI record isn't quite complete, and it will particularly help women. But it won't do anything at all for those women who chose to pay the married women's reduced contribution, and who continued to pay it after April 1978.

There are still a lot of women in the early retirement years, or not yet retired, who fall into this category.

It seems to me that this could be addressed in terms of the original design. Don't such women rely on their spouses contribution record? If they survive the spouse they get their pension amount instead. This takes no account of relationship breakdown of course. But 'all 'that has to happen is for a greater combined pension to be payable to a couple relative to a single person. At the moment it's something like 1.6 - so why not raise it (in stages) to 1.8

The point about the married women is that either they are (in which case they get the addition - in effect a secondary pension) or they are no longer - in which case they go into the full 'contributory' system and build towards one in their own name. Maybe if the spousal element for the years of any marriage where to be credited alongside these then any woman in this position should get between 80 and 100 percent full pension.

But in general the whole state pension is an absolute dogs dinner - a mish mash of elements built up over fifty years. Every cohort goes through under slightly different rules than every other cohort - rather like all those 'discontinued' passbook accounts people carry around. At some point the cost of all this raw information and record-keeping must become overwhelming (how many civil servants does it take to pay one person's pension? - old lightbulb joke) and the appeal of just being able to pay everyone the same flat rate sum at a given age is so much greater. The real reson they won't attempt to do this of course is stubborness. They can't admit that it's all been made too complicated from the start. So instead they come out with weird solutions liker Turner - which proposes a multiheaded approach. And they they adapt that and add more 'head's to the proverbial arrow. No surprise then when the thing takes off it is late and misses its target...

EdInvestor

The real reson they won't attempt to do this of course is stubborness..

Cost, surely? Plus of course misallocation of resources and fear of fraud - this latter seems real to me, given how much anti-immigrant feeling there is and how easily it is stirred up.

Apparently the White Paper is going to go on about the principle of working for your pensions - ie it's not a benefit (like pension credit) but an entitlement.

margaretclare

Milarky wrote:

The point about the married women is that either they are (in which case they get the addition - in effect a secondary pension) or they are no longer - in which case they go into the full 'contributory' system and build towards one in their own name. Maybe if the spousal element for the years of any marriage were to be credited alongside these then any woman in this position should get between 80 and 100 percent full pension.

There's a third group - those who, although married, chose not to rely on the 60% they might get from a husband's contributions, but paid full contributions themselves. This has been the case for any woman who got married after April 1978, those before that were given the option of staying as they were. I'm in that third group. My SRP is derived from my own full contributions over a working lifetime, and the fact that I was married - and now remarried - doesn't affect the situation.

I personally believe, and I've always believed, that pension provision should be down to the individual and should not rely, for a woman, on a husband's contributions. I believed that in the days when hardly anyone else thought that way, the years when you were almost seen as a deviant if you took responsibility for your own career and own pension provision! This is the case nowadays - see another thread below which asks whether a woman will get SRP at 60 or if she'll have to wait until husband retires. It has been well discussed on that thread.

Nevertheless - see the silver savers' board - there are a lot of people who are feeling very bitter and aggrieved and feeling badly-done to, see oap's posts for instance.

I do agree with you however, the whole state pensions system is a dog's dinner, a mish-mash as you say. It started a century ago on a completely different premise, then was altered in 1948, and since then, how many tinkerings there have been!

Margaret Clare

CIS

Rather than abolishing the 60% rule, from 2010 its being extended to apply to husbands claiming from wives.

The 60% system is okay, its a backup to people, if you remove it, you lose the backup unless they plan to introduce another scheme to replace it.

Milarky

I sort of agree with that CIS. But the way this takes us is - inevitably towards non-contributory/non means tested - a system of 'allowances' in other words. The end of the road is a 100% allowance-based pension payable on as few criteria as possible. These, it has been argued by the true 'modernisers' outside of gov't, should just come down to two things:

a) Do you/have you lived in this country?

b) Are you of a certain (65+) age?

And to this you could add tertiary categories such as

c) Do you have a disabilty/impairment which means you cannot be expected to work until 65?

Migrants are marginal cases and can be processed on the basis of reciprocal arrangments. The direction all this is pointing it is towards (are you ready Jackie Ashley?)

A 'universal' (i.e paid to anyone falling into 'a)' 'b)' or 'c)' above), largely flat rate (because all add-ons tried like GRB, SERPS, S2P have failed to boost the basic and are therefore an expensive distraction) state pension - let's be particularly vacuous and call it the 'One Pension' after R Branson's marketing gimmickry.

Every muscle the gov't strains is to resist the chorus of demands that the old-age pension be made flat-rate sooner rather than later. Yet despite there being no constituency calling for the retention of the multi-facted variable geometry bodge-up we have (literally) inherited and added to down the years they just cannot bring themselves to scrap it now. They will push on with this because -to them- it's a bit of marginal tweaking and (here I digress a bit) politics operates only at the margins - like only trying to get votes in marginal seat and ignoring 'safe' seats.

[rant over]

CIS

According to the daily mail the white paper will also suggests freezing S2P accrual at a maxmum income of #34000 for the foreseable future from the date of implementation - so it looks like the higher basic pension will be paid for by cutting S2P.

VeryTrying_2

CIS wrote:

Also it looks like the higher basic pension will be paid for by cutting S2P.

Yes, it seems to be that anybody paying into SERPS will get their expected pension considerably reduced. It would be sensible to contract out as soon as possible and stop wasting one's contributions!

What sort of message is this going to send out? - pay extra for additional pension, and at some point in the future we (the government) will change the rules and pocket your money.