MSE News: Budget 2012: Single state pension plan confirmed

Old_Slaphead

There will be an awful lot of people retiring between now an 2017 with very small annuities (thanks to QE) and/or modest saving (around £18,000) who won't be eligible for pension credit.

After they will be 'the new poor' with state pensions (currently £107pw) way below the rest of the newly retired.

So much for 'doing the right thing'

SnowMan

Was a bit worried about some of the earlier reports but having listened to the statement of the Pensions Minister and some of his answers to questions I am very encouraged by what is being proposed.

Would be nice to be able to see the White Paper though.

Errata

Old_Slaphead wrote: »

There will be an awful lot of people retiring between now an 2017 with very small annuities (thanks top QE) and/or modest saving (around £18,000) who won't be eligible for pension credit.

After they will be 'the new poor' with state pensions (currently £107pw) way below the rest of the newly retired.

So much for 'doing the right thing'

Isn't it interesting? They'll get c £107pw + inflation and new pensioners in the same position will get £140 + inflation.

gadgetmind

Link to white paper here. Worked examples at end of Executive Summary.

http://www.dwp.gov.uk/policy/pensions-reform/state-pension/

http://www.dwp.gov.uk/docs/single-tier-pension-executive-summary.pdf

StevieJ

Errata wrote: »

Isn't it interesting? They'll get c £107pw + inflation and new pensioners in the same position will get £140 + inflation.

I don't understand why current pensioners think they are losing out, I don't think any will lose out, the other way round if anything.

Old_Slaphead

Errata wrote: »

Isn't it interesting? They'll get c £107pw + inflation and new pensioners in the same position will get £140 + inflation.

Yes siree.

Wouldn't have thought it a crazy idea to reduce the difference over say 10 years by giving pre 2017 oldies inflation plus a few quid extra to 'catch up'

Old_Slaphead

StevieJ wrote: »

I don't understand why current pensioners think they are losing out, I don't think any will lose out, the other way round if anything.

There are some obvious winners. Some women with kids, self employed, final salary pensioners retiring just after 2017 etc.

The Govt says it is cost neutral.

The Govt says there are 'winners and losers'.

Explain why a current pensioner will gain ?

marathonic

gadgetmind wrote: »

Link to white paper here. Worked examples at end of Executive Summary.

http://www.dwp.gov.uk/policy/pensions-reform/state-pension/

http://www.dwp.gov.uk/docs/single-tier-pension-executive-summary.pdf

With the state pension age rising by 2 years to 67 over the next 15 years, one can only assume that it'll be at least 70 within the next 40 years.

With this in mind, and oversimplifying things a little, lets assume a 35 year old who had been contracted out right up until it was abolished last year. I believe this would mean that they'd have some sort of National Insurance record but, to simplify things, let's say they've NONE.

They'd now have their National Insurance refunds in their private pension and, with 35 years to retirement, could build up a full state pension under the new rules.

Is the above correct? If so, it would appear that those in the 'under 35' category that have been contracted out are in the best position, i.e. they've got their National Insurance rebates in their private pension and a FULL state pension.

I know that those in this category will probably be minimal as the general advice over the past decade has been that contracting out represented poor value due to a reduction in the rebates available compared to previous decades.

StevieJ

Old_Slaphead wrote: »

There are some obvious winners. Some women with kids,self employed, final salary pensioners retiring just after 2017 etc.

The Govt says it is cost neutral.

The Govt says there are 'winners and losers'.

Explain why a current pensioner will gain ?

How are final salary pensioners gaining? they will face a deduction for contracted out years? Some women with kids will now require 35 years instead of 30, self employed maybe but will they now have to pay increased contributions? Then when you consider current pensioners will have retired at 65/60, I know which system I would prefer.

Errata

StevieJ wrote: »

I don't understand why current pensioners think they are losing out, I don't think any will lose out, the other way round if anything.

Current state pension £107 plus, say, annual increase of 1% for next 4 years = not very much.
New state pension £140 plus, say, annual increase of 1% until 2017 = a great deal more.
Who do you think loses out?