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MSE News: Calls for 'graduated' state pension

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This is the discussion thread for the following MSE News Story:

"The Government should consider paying the state pension early but then offering less in retirement, a report says today ..."
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  • MacMickster
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    The idea of a flexible retirement age with an actuarily reduced or supplemented state pension is attractive, giving people more choice to plan their retirement, however there would need to be precautions to ensure that there was no incentive to take a lower pension earlier, only for this to be then topped up by benefits.

    Hopefully this would encourage people to make payments towards a personal pension, the incentive being potential earlier retirement combining their income from both state and personal pensions rather than having to work until an ever increasing state pension age.
    "When the people fear the government there is tyranny, when the government fears the people there is liberty." - Thomas Jefferson
  • gadgetmind
    gadgetmind Posts: 11,130 Forumite
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    I guess it all depends on how much you'd lose if you took it 5/10 years early.
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
  • Paul_Herring
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    Hopefully this would encourage people to make payments towards a personal pension, the incentive being potential earlier retirement combining their income from both state and personal pensions rather than having to work until an ever increasing state pension age.

    The incentive is already there - you can start taking a personal pension from age 55. If that's not enough incentive for those not already doing it, then I fail to see how allowing people to take their state pension earlier is going to induce them to put more away than they already are (i.e. nothing.)
    Conjugating the verb 'to be":
    -o I am humble -o You are attention seeking -o She is Nadine Dorries
  • MacMickster
    MacMickster Posts: 3,630 Forumite
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    The incentive is already there - you can start taking a personal pension from age 55. If that's not enough incentive for those not already doing it, then I fail to see how allowing people to take their state pension earlier is going to induce them to put more away than they already are (i.e. nothing.)
    The problem is that in order to retire early, your income from your personal pension would have to be sufficient to live on alone. You would then receive a relatively large boost in income on reaching state pension age.

    Many realise that they have little realistic prospect of saving enough to provide a large enough private pension to enable them to retire, say, 5 years early. If, however, they were able to supplement their private pension with a reduced state pension then this may encourage them to make their own pension provision.
    "When the people fear the government there is tyranny, when the government fears the people there is liberty." - Thomas Jefferson
  • Paul_Herring
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    The problem is that in order to retire early, your income from your personal pension would have to be sufficient to live on alone. You would then receive a relatively large boost in income on reaching state pension age.

    Many realise that they have little realistic prospect of saving enough to provide a large enough private pension to enable them to retire, say, 5 years early. If, however, they were able to supplement their private pension with a reduced state pension then this may encourage them to make their own pension provision.

    The full state pension isn't really that much (£102.15 per week - or 17 hours at minimum wage - less if you get more per hour.)

    Having a 'reduced amount of it' isn't really going to change very much.

    I'm assuming that no pension credit will be available until the 'state retirement age' (which I shall assume to be the age you get 100% of your state pension.)
    Conjugating the verb 'to be":
    -o I am humble -o You are attention seeking -o She is Nadine Dorries
  • jennifernil
    jennifernil Posts: 5,584 Forumite
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    edited 23 November 2011 at 1:05PM
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    They have a scheme something like this in Norway. There, pension age is 67, but you can retire completely and take your pension from 62, at a reduced rate, or any time up to 72. If you wait till after 67 you get a higher rate.

    Once you claim it, it stays at that reduced (or increased) rate forever (with index linking of course).

    They also have the "part work part pension" scheme where you work say 3 days a week for a proportionally reduced wage, and then claim a portion of your pension to help make up the shortfall.

    I don't know all the details as this only came in this year, after OH retired, but it seems very flexible as you seem to be able to increase your working hours again if you change your mind.
  • gadgetmind
    gadgetmind Posts: 11,130 Forumite
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    The full state pension isn't really that much

    It would take a pot of over £75k to afford that in a private pension, so it really does reduce what people have to save. The only people who think the state pension isn't much are those who save nothing for themselves and use the state pension as the core of their retirement income rather than a handy top-up.
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
  • Paul_Herring
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    gadgetmind wrote: »
    It would take a pot of over £75k to afford that in a private pension, so it really does reduce what people have to save.
    If you think £100 per week is a lot, then all power to you. I know it won't be for me; assuming there is even a state pension scheme around when I 'retire.'
    The only people who think the state pension isn't much are those who save nothing for themselves and use the state pension as the core of their retirement income rather than a handy top-up.
    No, that's not the only group of people who think it isn't much.

    At least one other group is those who are actively saving enough such that they don't have to rely on the state pension.
    Conjugating the verb 'to be":
    -o I am humble -o You are attention seeking -o She is Nadine Dorries
  • gadgetmind
    gadgetmind Posts: 11,130 Forumite
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    If you think £100 per week is a lot, then all power to you.

    Did I say that?
    At least one other group is those who are actively saving enough such that they don't have to rely on the state pension.

    I know I'll have to bridge the decade or so between retirement and SPA from my own funds, and could see out my days without SP, but it's a nice boost.
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
  • Paul_Herring
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    gadgetmind wrote: »
    Did I say that?

    No, but I read it as implied by the way you replied to my comment - sorry if that's not what you were getting at.
    Conjugating the verb 'to be":
    -o I am humble -o You are attention seeking -o She is Nadine Dorries
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