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

bryanb

wakeupalarm wrote: »

Atm we have graduated, SERPS, S2P, basic state pension.
A person receiving a total pension consisting of all of the above of less then the pension credit minimum amount is uprated to £132 atm.

Oh how I wish this was true!

dunstonh

bryanb wrote: »

Oh how I wish this was true!

Its not uncommon to see over £10k a year for a single person.

Its not theoretically possible now for someone starting out as S2P is lower than SERPS used to be (those with a good SERPS record during the early years of SERPS typically did well out of it). However, its still possible to achieve around £3500 S2P on top of the basic. That would equate to £163 p.w. for a single person.

Wendyharvey

As usual, existing pensioners are going to be left out of the equation. This proposal appears to apply only to people who retire after 2015. Just after I retired, the rules were changed, again for future pensioners, inasmuch as they only needed 30 years of contributions in order to receive the full state pension, whereas existing female pensioners had needed 39 years and male pensioners had needed 44 years. Now, it seems, not only will we miss out on the proposed £140 for everyone pension, but future yearly percentage rises to the state pension will ensure that the gap between the present and future pensions will be huge by the time present pensioners have died which could be another 30 years! Yet another blow for women who stayed at home to bring up their children or others (usually women) who have cared for elderly relatives. But, hey, if you are an immigrant who has made no contribution towards your pension, but are deemed "resident" in the U.K. sounds like you will be O.K.

Gemstar30

I have been following this with some interest.
As far as I can see there are so many variables that I can't see where the savings will come from.

If I take it that means testing will stop (thereby reducing the costs of operating Pension Credit), then EVERY pensioner should have the increase. Otherwise they WILL still have to have Pension Credit for as long as the last pensioner lives that is on the 'old' pension arrangements.

What will happen to those pensioners that have a mortgage. Currently they can claim up to £63 pw interest payments on Pension Credit.
What about those that have the Disability premiums attached to Pension Credit?

Take a couple both over 65, both in receipt of Higher rate DLA, with a £100,000 mortgage:

Minimum- couple £202.40
Disability premiums £107.30
Housing Costs £ 63.46
Weekly Pension Credit £373.16

New system £280.00

make-do=and-mend_2

viv0147 wrote: »

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

Used to work for DWP (Income Support, as it was) and staff generally agreed that if the basic State Pension was raised to a decent level then folk would be spared the humiliating process of means testing. Think how much would be saved if all those claims didn't have to be processed and then maintained for the next 20 years or more. So many are still too proud to claim Pension Credit, even though they would qualify. It may have a new name, but it is still Income Support and the way it is calculated is so complicated, most don't understand it. They work hard all their lives,on low wages, living hand to mouth, and never manage to put away anything for retirement.
I'd have thought the saving on administration costs would cover the increase!

hugheskevi

I'd have thought the saving on administration costs would cover the increase!

DWP spends £99.8 billion on people over working age, taken from these expenditure tables.

DWP gets £7 billion for its entire administrative budget, in the CSR. Of this, the majority is spent on Working Age, for example, running the job centre network. Looking at the Departmental Report shows that 60% of DWP resource DEL (admin spend) goes on Children and Working Age. This doesn't include several other categories (eg corporate and shared services) so expenditure on pensioners is considerably less than 40%.

Which all means that considerably less than £3bn of DWPs budget is spent on administering pensioners. Even if the administration could be done at zero expense, and using £3bn as the amount this would free up, that is less than a 3% increase available for expenditure on pensioners.

Using realistic numbers, I'd be very surprised if you could increase expenditure on pensioners by anything more than 1% as a result of admin savings no matter how you arranged the administration and benefit structure. Not that this wouldn't be worth having of course, but 1% has to be taken in perspective. It couldn't fund radical and expensive expansions of expenditure on pensioners

As far as I can see there are so many variables that I can't see where the savings will come from.

Detail is very thin, so all we can do is speculate. However, there are some sensible conclusions which can be drawn.

This clearly doesn't affect existing pensioners, only the new on-flow of pensioners.

It is said that the policy is of particular benefit to women and the self-employed. So there is additional cost.

Most means-testing does not have a £1 for £1 deduction. So whilst there is a saving from means-testing if you were to give everyone £1 more, it isn't a 1 for 1 saving even for those in receipt of means-tested benefits.

So, there are people who gain from this, and hence there is a cost to be met. This means that by definition either:

• Taxes must rise, other Govt expenditure must fall, or we borrow more than we otherwise would have done.

Or,

• The existing pot of money forecast to be needed for pensions is redistributed, so that whilst some groups (eg women and self-employed) gain, other groups lose.

jamesd

Wendyharvey wrote: »

Yet another blow for women who stayed at home to bring up their children or others (usually women) who have cared for elderly relatives.

It's the women and men who have stayed at home instead of making earnings-related NI contributions who are the huge gainers from this transfer of wealth. Men and others with complete contribution records, particularly if at high earnings, are the major losers who will be paying more in taxes to fund this, but not get much more payment.

First, women with incomplete NI records gained from having the number of years required reduced to 30 years.
Now, women who didn't make any earnings-related NI payments will get the same earnings-related income as those who paid in the maximum for a whole working life.
Even after the change to the same state pension age, women will on average be collecting the state pensions for three years longer than men, because that's about how much longer than men women live.

It's hard to get a better deal than the maximum possible earnings-related benefit, above one an average earner would get today, for no or minimal contributions, and getting it for longer without having to pay in more or retire later to get the extra benefit.

gadgetmind

My retirement plans don't include anything from HMG. By the time they allow me to retire, the pot will be empty, and I therefore expect to get zero back for all the tax and NI I have paid and will pay. Make your own provision guys, and pay as little tax and NI as you can - state pensions are one big ponzi scheme and it's all going to end in tears.
Ian

pickers64

There is a pension scandel that dwarfs 1990's misselling and Equitable Life. Namely the treatment of women currently aged between 50 and 55. Roz Altman of SAGA estimates they will lose on average £15,000, but it could be much more. For eg a female aged 54 with full NI contributions would be likely to get a state pension of about £7,000 per year with SERPS . A couple of years back they probably received forecasts from DWP showing this payable from 2016. Now this has changed to 2021 and looks like going to 2022, meaning they lose £42,000. The age increase is necessary but over the longer term so it is fair. It is ludicrous to expect women to change plans so late in the day with no time (in pension terms) to make alternative arrangements. I know many women in this age group are not aware of this change, or do not understand the consequences and still plan to retire at 60. Unless they have a very good private or occupational pension, which only a few do, they are likely to end up in serious financial trouble after a lifetime of paying into the scheme. In France they are out burning the boulevards for proposed minor changes to their pensions. Come on Martin get this issue moved up the agenda let people know what is happening. How about a "Tonight Special" on TV.

dunstonh

A couple of years back they probably received forecasts from DWP showing this payable from 2016. Now this has changed to 2021

This just shows how out of date SAGA are. This change from 2016 to 2021 (in this example) hasnt happened now. It happened over 15 years ago when the legislation changed in 1995. So, it was impossible to receive a forecast from the DWP a couple of years back showing it payable from 2016.

and looks like going to 2022

That is the bit that is changing this year. A one year increase and that is staged as well.

The age increase is necessary but over the longer term so it is fair.

You mean just how it has happened then. i.e. over 15 years and then in progressive steps over the following 6 years. By 2016, it would have been 21 years since the change was put in place.

I know many women in this age group are not aware of this change, or do not understand the consequences and still plan to retire at 60.

They have no-one to blame but themselves then. It was covered a lot in the media back in the early 90s. State pension forecasts have taken it into account. Anyone who has done retirement planning with them would have told them. Ignorance is no excuse really.

How about a "Tonight Special" on TV.

A good idea. A Tonight Special on how out of touch Saga are about pensions and the people they represent.

Any mention of the rule change lowering the qualification to 30 years where many Women will benefit from that? or is good news banned by SAGA?