MSE News: State pension could rise to £140 a week

StevieJ

viv0147 wrote: »

What about the people on pension credit, they qualify from the age of 60 ?

I think that is increasing to 65 anyway.

StevieJ

Raggs wrote: »

When you see how much the government has spent on websites, it becomes very clear just how much money can get easily wasted. So I don't have too much trouble believing that means testing alone can make such a difference. But I feel that "residency in Britain" line carries a lot of meaning with it.

I think EU law may have some impact on that, it would probably be illegal to discriminate, many ex EU are already badly treated by the fact that their pensions are not uprated for inflation.

harz99

If these proposals come to fruition, I sincerely hope that ALL pensioners are treated equally and we don't end up with a two tier pensioner society - the existing pensioners on an old lower rate, those after the implementation date on a new higher rate!

That is effectively what happened when the NHIC qualifying years for State Pension were reduced.

dodger1

Raggs wrote: »

That's a very large increase, and I suspect that it's not just getting rid of beaurocracy that is doing it, but the "residency in Britain" could perhaps spell trouble for retired expats?

It's not a large increase for many pensioners. The state pension for a single person is £97.65 per week which is increased to £132.60 if you don't have too much in savings or other income including private pensions. So the increase for the poorer pensioner would be £7.40 and for the better off the increase would be £42.35 per week as means testing would be removed.

So the actual increase would be between £7.40 and £42.35 per week with the wealthiest getting the top end, the poorest the bottom end and the rest of us somewhere in between. I'm not saying this is good or bad just simply it's a good deal for the already better off.

dunstonh

That's a very large increase

Its not really when you remember that its replacing both the basic state pension and the second state pension as well as pension credits. In fact, the single persons figure is probably lower than the current method if you take a typical basic state pension and SERPS/S2P/Graduated pension amount for an employed person.

The self employed look like the big winners here. Those contracted in look like the losers (assuming retrospective qualification - although it probably wont be).

wotsthat

...and to pay for this it looks as if the state second pension will be sacrificed.

The past arguments about whether to opt out or back in are now irrelevant - those who opted out have a pension with their name on it; those who stayed in have another broken promise to deal with.

gadgetmind

Getting rid of means testing was essential as otherwise people won't save for themselves. That those already saving (and paying a lot of NI) benefit is probably a short-term thing: HMG want people to save so they can slowly reduce what the state pays out; they are playing the long game.
Ian

gadgetmind

I opted out pretty much as soon as you could, but sadly "went back in" about four years ago. I guess I'll have mixed feelings when I look at my Protected Rights, assuming this money isn't confiscated at some future point.

StevieJ

dodger1 wrote: »

increase would be £42.35 per week as means testing would be removed.

So the actual increase would be between £7.40 and £42.35 per week with the wealthiest getting the top end, the poorest the bottom end and the rest of us somewhere in between. I'm not saying this is good or bad just simply it's a good deal for the already better off.

Making more sense now

dunstonh

The past arguments about whether to opt out or back in are now irrelevant - those who opted out have a pension with their name on it; those who stayed in have another broken promise to deal with.

That has been on the cards for a long time. Indeed, it was seen as one benefit of contracting out.

I opted out pretty much as soon as you could, but sadly "went back in" about four years ago. I guess I'll have mixed feelings when I look at my Protected Rights, assuming this money isn't confiscated at some future point.

Protected rights in money purchase schemes are being abolished in two years time and reclassified as non protected rights. It would require primary legislation to reclaim protected rights and be hugely damaging to the UK stockmarket (could probably create a market crash overnight) and a logistical nightmare. So, whilst it is theoretically possible, it is an unlikely course of action. It is also worth noting that previous reduction in contracted in benefits (3 times for women, 4 times for men) did not result in any clawback or reduction to those that were contracted out.

Looking at my 2005 research report on contracting out it says the following:


There are several reasons to suspect that S2P might be reduced in the future, including the following:
SERPS has been reduced 3 times for men and 4 for women.
Government has stated its intent to change S2P to a flat-rate scheme and this might affect S2P entitlements that have accrued prior to such a change.
If Government bows to the pressure to scrap additional state pensions and increase the Basic State Pension, S2P entitlements that have already accrued might be lost.

It is very unlikely that any Protected Rights would be clawed back in the event of changes to S2P. None were when SERPS was changed and it would take primary legislation to do so. Some might say that a bird in the hand is worth two in the bush.


So you can see, that this has been on the cards for quite a while now.