MSE News: Flat-rate state pension could be £155 a week

StevieJ

The green paper mentions simplicity, I think employers with pension schemes may have another word for it when they have to amend their schemes to the before and after scenario re contracting out. It does explain one thing that has been confusing me, there will be a reduction in state pension for those who had previously contracted out.

This means that the need to apply an offset to take account of periods spent contracted out of the State Second Pension would continue under single tier.

StevieJ

bigfreddiel wrote: »

I retire this year at 60 from the civil service, I'm 65 in 2016 so will I be eligible for this simplified pension as my NI contributions will have ceased? I've made 40 yrs of contributions so I think I qualify.

cheers fj

Are civil service pensions contracted out? if so you will probably end up with £140 - £43 = £97 as you would do now.

WillowCat

StevieJ wrote: »

Are civil service pensions contracted out? if so you will probably end up with £140 - £43 = £97 as you would do now.

Depending on the contracted out amounts you may end up with less than now.

lvader

StevieJ wrote: »

The green paper mentions simplicity, I think employers with pension schemes may have another word for it when they have to amend their schemes to the before and after scenario re contracting out. It does explain one thing that has been confusing me, there will be a reduction in state pension for those who had previously contracted out.

Everything I've read points to those who have some SP2 would keep it, so those contracted out wouldn't be affected apart from no longer getting the benefits of being contracted out after the change. I.e. what you have earned you keep either way.

bilbo51

lvader wrote: »

Everything I've read points to those who have some SP2 would keep it, so those contracted out wouldn't be affected apart from no longer getting the benefits of being contracted out after the change. I.e. what you have earned you keep either way.

Not according to the consultation paper which looks to, in a way, claw back from contracted out pensions in order to get to the £140 figure from the basic pension of £97. The words used are somewhat confusing...

SnowMan

lvader wrote: »

Everything I've read points to those who have some SP2 would keep it, so those contracted out wouldn't be affected apart from no longer getting the benefits of being contracted out after the change. I.e. what you have earned you keep either way.

Yes it was interesting to read that there was every indication that SERPS and S2P accrued in the past would be protected. And so only future accruing state pension would be affected.

The transaction in terms of past rights under the more radical option (option 2) is shown in para 95 of the green paper.

Under the less radical option (option 1) the move to future accrual of a flat pension is brought forward with no change to past rights so again past SERPS and S2P are protected

Although I'm not assuming that this protection will definitely happen come the final legislation. And it is just possible to read it that the protection of past SERPS and S2P rights (in excess of £140 - £97) is funded out of future accruing state pension.

StevieJ

This begs the obvious question, how is this simpler?

Old_Slaphead

Some more analysis from today's Citywire....

http://www.citywire.co.uk/new-model-adviser/govt-lays-out-two-options-for-state-pension/a484476?ref=new-model-adviser-latest-news-list


2 options appear to be under consideration

SnowMan

As we might have expected from the budget there is further mention in chapter 4 of the green paper of likely further increases to State Pension Age in line with increasing life expectancy.

These are addition to the increases to 66, 67 and 68 already announced some time ago, which it mentions were based on now out of date (understated) life expectancy statistics.

How they do this and how much notice they give people is completely up for consultation it seems.

bilbo51

Old_Slaphead wrote: »

2 options appear to be under consideration

You can read them here starting at chapter 2.
http://www.dwp.gov.uk/docs/state-pension-21st-century.pdf