MSE News: Budget 2012: Single state pension plan confirmed

Former_MSE_Helen

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

"The Government has confirmed plans to merge the basic and second state pensions..."

Read the full story:
Budget 2012: Single State Pension Plan Confirmed

Dynamic_Young_Pensioner

So exactly when is this going to happen?

I can start taking my pension early 2014 and have a forecast including Serps which totals £210 per week.

After paying in all my life, surely they can't cut one third off my expected pension?

BridgetK

I've found this site, by googling tax allowances 2012-2013 which gives some more information
professionalpensions.com

but they mention ARAs, does this mean the second pension, i.e. serps etc?

My partner was born 2 april 1948 (due to retire next year) does this mean he will get the £200+ quoted on his pension forecast??

As already mentioned, surely they can't take away something you've been paying into all your working life.

I don't work, and can't get a pension for another 9 years. I got caught by the age rise to 65 and then to 66!!

I can't see how we could manage on £140 a week.

SnowMan

Dynamic_Young_Pensioner wrote: »

So exactly when is this going to happen?

I can start taking my pension early 2014 and have a forecast including Serps which totals £210 per week.

After paying in all my life, surely they can't cut one third off my expected pension?

This is what it says in the budget report

Single tier pension
1.212 The Government will reform the State Pension into a single tier pension for future pensioners. The new system will be introduced early in the next Parliament and will be set at a level above the means tested standard Guarantee Credit and all State Pension records will be recognised. As set out in the Green Paper published by the Department for Work and Pensions (DWP), the single tier will cost no more than the current State Pension system in every year. The Government will bring forward further detail in a White Paper in the spring, with final decisions on the detailed implementation of the policy being taken at the next spending review.

So almost a certainty you will not be affected reaching SPA in early 2014. There won't be any retrospective element to it.

molerat

I look forward to it as I was contracted out for all but a few years so my additional pension currently is forecast at around £12 pw

SnowMan

molerat wrote: »

I look forward to it as I was contracted out for all but a few years so my additional pension currently is forecast at around £12 pw

Sadly for you it won't work that way. There will be a deduction from the flat amount for periods where you have been contracted-out of SERPS to reflect that part of your state pension is being provided by the contracted-out arrangement. The green paper refers to this.

They seem to have opted for option 2 in the green paper which is the interesting announcement that has been made in the budget report.

The detail is yet to be decided.

Pincher

We'll pay you what we can borrow from the Brazilians.

That's what I expect from my next pension forecast.
The last state pension forecast is obviously "out of date" now.

SnowMan

Other interesting thing in the Budget report was about State Pension Age

2.11 State Pension age – The Government will commit to ensuring the State Pension age is increased in future to take into account increases in longevity and will publish proposals at the time of the OBR’s 2012 Fiscal sustainability report.

The 2011 Fiscal Sustainability Report came out in July 2011 so I am guessing we will find out more in July this year.

dunstonh

The deduction for contracting out was detailed as taking back upto £40 of the £140. So, if your contracted out benefits were say £150pw, then you would still be £110pw better off.

Time will tell though as there is still a lot of tinkering and factual information to follow.

Gracchus_Babeuf

SnowMan wrote: »

Sadly for you it won't work that way. There will be a deduction from the flat amount for periods where you have been contracted-out of SERPS to reflect that part of your state pension is being provided by the contracted-out arrangement. The green paper refers to this.

They seem to have opted for option 2 in the green paper which is the interesting announcement that has been made in the budget report.

The detail is yet to be decided.

What does this mean in plain English?

I'm 45 and I've been contracted out for only around 3 years of my working life - how does this affect me? My current S2P forecasts mentions around £23 a week in S2P.

SnowMan

Gracchus_Babeuf wrote: »

What does this mean in plain English?

I'm 45 and I've been contracted out for only around 3 years of my working life - how does this affect me? My current S2P forecasts mentions around £23 a week in S2P.

In plain English it means don't assume you will get exactly £140 per week in State Pension.

Until they have worked out the detail of the scheme and how they will deal with people who have already built up past entitlements to additional pension (such as S2P) and without knowing your full contribution history it is impossible to say.

I could guess how the scheme might work but I couldn't explain it in plain English. The State scheme is way too complicated to be able to do that.