why top up NI contributions if a flat rate pension is being introduced?

cepheus

I understand it may be beneficial for some to pay missing NI years to top up the state pension. However, what happens if this flat rate pension is instigated. Wouldn't this make the NI contributions irrelevent, and any payment wasted?

Treasury to sign off £140 state pension

Daily Mail
3 March 2011
Ministers are on the brink of winning a battle with the Treasury over plans for a new £140-a-week state pension for all.


Read more: http://www.thisismoney.co.uk/pensions/article.html?in_article_id=524295&in_page_id=6#ixzz1FWXLLbUS

dougz_2

Potentially very interesting news in that link, because it seemed to have all gone a bit quiet since the flat rate pension was first touted last October.

Yet there seems to be no mention of the elephant in the room in this newly published article on here http://www.moneysavingexpert.com/reclaim/increase-state-pensions, or in this weeks email suggesting people pay to pay more voluntary NI.

SallyG

Do we know yet if people like me already getting Basic State Pension will receive the " new £140-a-week state pension for all" if the Treasury agrees the scheme?

kidmugsy

Ah, what wonderful journalism:

"Proposals for the biggest shakeup of the system since its inception more than 50 years ago have been stalled for months." The state pension was introduced before the first world war.

RichandJ

kidmugsy wrote: »

Ah, what wonderful journalism:

"Proposals for the biggest shakeup of the system since its inception more than 50 years ago have been stalled for months." The state pension was introduced before the first world war.

To be fair, that is more than 50 years ago.

But I do get your point about sloppy, lazy, know-nothing journos.

Loughton_Monkey

Our Government does silly things. To give a 'flat' £140 a week without NI qualification would have every European and his wife over here when they got to 64.

They cannot be that stupid can they?

kidmugsy

"They cannot be that stupid can they?"

The Pensions Minister is a Liberal Democrat.

dougz_2

A couple more stories on this today
http://www.moneymarketing.co.uk/channels/corporate-adviser/dwp-and-treasury-on-verge-of-deal-on-flat-rate-pension-contracted-out-to-get-less/1027137.article
http://www.moneywise.co.uk/news-views/2011/03/03/pensioners-line-2000-state-pension-boost

The latter suggests that this new '£140' state pension would still penalise those without a full NI tax record. If so, how can it be called flat rate, and how does it avoid many of such people being effectively mis-sold a worthless personal pension via the new auto enrolment?

RichandJ

kidmugsy wrote: »

"They cannot be that stupid can they?"

The Pensions Minister is a Liberal Democrat.

In which case they most certainly can as anything to do with Yurop is an article of faith for the salads. Wonder if he's told Osborne about this new unfunded liability ? :eek:

This post is not meant to be taken (too) seriously, if it creates mental turbulence please do not adjust your monitor, normal service will shortly be resumed.

dougz_2

Enough of the political spam, please.

I have found another story suggesting that a full NI record will still be required. So I fail to see the logic in Altmann's statement:
“...introducing a minimum State pension of £140 a week will be the biggest improvement to State pensions in our lifetime and especially beneficial for women.”
Given that woman are far more likely to have a broken NI record, then surely many of them will still lose out?
http://blogs.telegraph.co.uk/finance/ianmcowie/100009679/biggest-improvement-to-state-pension-in-our-lifetime-imminent

hugheskevi

Given that woman are far more likely to have a broken NI record, then surely many of them will still lose out?

Most will get to 30 qualifying years quite easily.

Take 3 years of starter credits (being abolished, but current adults will still keep them), and the requirement is 27 qualifying years between age 18 and 65 (for people reaching State pension age after 2018), which isn't very challenging. Some years of work, claiming unemployment, claiming sickness benefits and having a child should all be enough to get the vast majority up to 30 years.

One of the key benefits for women of a flat-rate pension would be Additional Pension. This is earnings-related and is far more related to actually working because there have been fewer credits into AP than into Basic State Pension.

As such, women usually have lower Additional Pension than men. So equalising everything at £140 would remove that Additional Pension advantage.