Flat Rate Pensions

Oldernotwiser

Errata wrote: »

Could any government get away with paying some pensioners c40% more than others? 'Tis a big difference!

Assuming that the basic pension increases by a couple of percentage points each year and the £140 flat rate stays the same as is being discussed, the gap between the two may not be that great.

Errata

That's true, but then people on PC to bring them up to £132 now, will have had increases in that which could take them well over £140 if it stays at that. Which I don't think it will.

sardine

This is one subject that I have taken a more than casual look at as it won't be that long before I come up to getting my OAP.
Whilst a lot of it isn't law yet, it does seem that they are well on their way to getting it there.
Take two single guys


1. Hasn't done much with his life, signed on, did a bit of work, then signed on again. Lives in a rented house costing £125.00pw
Curently he would get: the minimum OAP of £97.65pw + Pension Credit of £34.95pw = £132.60pw + Housing Benefit £125.00pw = £257.60pw
Under the new scheme he would get: the OAP £140.00pw + Housing Benefit £125.00pw = £265.00pw


2. Worked all his life, and still has a small mortgage of £25.00pw interest.
Currently he would get: the minimum OAP £97.65 + 2nd Pension (SERPS/NIGP) £44.00pw + Pension Credit £15.95pw = £157.60pw out of which he would pay the interest of £25.00pw leaving him with £132.60pw.
Under the new scheme he would get: the OAP £140.00, but made up to £141.65pw and no more help towards his housing costs = £141.65pw out of which he would pay the interest of £25.00pw leaving him with £116.65pw.

With the increase in the OAP to a flat payment of £140.00pw, they are intending to get rid of Pension Credit which obviously means no more help for mortgage interest, but yet it will not affect housing benefit.


Under the system as it is now both guys 1 & 2 would have the same net spendable income of £132.60pw to live off.

Under the new system, Guy 1 would have £140.00pw net spendable income to live off, whilst guy 2 would have £116.65pw net spendable income to live off because he has a small mortgage, whereas guy 1 gets all of his rent paid for!!!!

Even if guy 2 didn't have a mortgage, he would still only be £1.65pw better off than guy 1 (£141.65 - £140.00)!!

You tell me who is the mug???

If I had my time all over again, I would not have worked hard like I have and put my health at risk all for the sake of an extra measly £1.65pw.

luminated

Hi Sardine

Interesting reading but are you not making a lot of assumptions? Mainly that no one yet knows the details. I also am within two years of being 65 so have been reading every bit of news on the matter. The Green Paper was due to be issued at the same point as the Budget (today) but very quiet on all fronts. No coverage on TV, in the papers or from the government so will it be delayed again as it has been for many months already?

I just hope the budget has some positive news.

sardine

luminated wrote: »

Hi Sardine

Interesting reading but are you not making a lot of assumptions? Mainly that no one yet knows the details. I also am within two years of being 65 so have been reading every bit of news on the matter. The Green Paper was due to be issued at the same point as the Budget (today) but very quiet on all fronts. No coverage on TV, in the papers or from the government so will it be delayed again as it has been for many months already?

I just hope the budget has some positive news.

Yes, as I have said, nothing is law as yet. But the question of paying a flat rate OAP and scrapping Pension Credit is high on their lists.

bobthedambuilder

Just got off the TV watching the Budget speech, and Osborne mentioned this, but gave no more detail than has already been said. He did say that it wouldn't apply to existing pensioners, and was still at a discussion phase at the moment, so wouldn't be applied for several years if adopted.

I still can't see how this will "simplify" matters if existing pensioners are still to be treated under a 2 tier system which is means tested.

seven-day-weekend

bobthedambuilder wrote: »

Just got off the TV watching the Budget speech, and Osborne mentioned this, but gave no more detail than has already been said. He did say that it wouldn't apply to existing pensioners, and was still at a discussion phase at the moment, so wouldn't be applied for several years if adopted.

I still can't see how this will "simplify" matters if existing pensioners are still to be treated under a 2 tier system which is means tested.

It will eventually, when all of us under the 'old' system have died!

margaretclare

bobthedambuilder wrote: »

Just got off the TV watching the Budget speech, and Osborne mentioned this, but gave no more detail than has already been said. He did say that it wouldn't apply to existing pensioners, and was still at a discussion phase at the moment, so wouldn't be applied for several years if adopted.

I still can't see how this will "simplify" matters if existing pensioners are still to be treated under a 2 tier system which is means tested.

This link explains it pretty clearly. http://www.telegraph.co.uk/finance/personalfinance/how-budget-affect-me/8400277/Budget-2011-losers.html

Errata

I'm still putting my money on: flat rate for all pensioners, those with 2nd state pension continue to receive it, flat rate to rise in line with RPI/CPI/inflation/something else. Pension credit scrapped, HB and CTB continue to be awarded dependant on savings.

jojo1964

Eventually state pension will be allowed to "wither on the vine" when we all have to "opt out" of company pensions.