MSE News: Budget 2012: Single state pension plan confirmed

gadgetmind

Old_Slaphead wrote: »

Explain why a current pensioner will gain ?

OK, so you might not gain, but you got to retire earlier than we will and you accumulated S2P far faster than anyone has over the last few years.

As it happens, I think I will be a loser under the new system but I still think it's a good idea.

gadgetmind

Errata wrote: »

Who do you think loses out?

Those with < 35 years of contributions at SP age, and particularly those who have less than 10 years.

Those who were contracted out for a long time and won't have accumulated much S2P at SP age to compensate.

buffman

Am I correct in assuming that under these proposals, individuals can continue to pay NIC Class 3 to top up their number of qualifying years? Somone who has topped up to 35 qualifying years by paying NIC Class 3 will receive the full flat state pension of £144?

Mindovermatter_2

marathonic wrote: »

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.

I'm just under 35 but did not contract out with18 years NI contributions, I have £29/week S2P. So total pension to date is £93.47 per week.... Many years to go..

so in 2017 will they look at my latest statement and if it is lower than £144 (or equivalent) they will do away with my S2P? And I will then just be on the flat rate?

Or (as I hope) will I be on flat rate, plus my earnt S2P?

SnowMan

gadgetmind wrote: »

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

The worked examples are quite interesting.

My immediate thought is that the calculation of the Foundation Amount is going to be key to many individuals, especially those approaching SPA, in working out how they are affected by the changes.

In particular how the contracted-out deduction is made in calculating the Foundation Amount and how the valuation under the existing rules is calculated.

In one of the examples relating to the Foundation Amount it says

His National Insurance record as at implementation is valued under the single-tier rules, which take into account his qualifying years, and also a deduction to reflect lower National Insurance contributions paid during his time spent contracted-out.

A check is performed to see if Matt would get a higher valuation under the rules of the current system.

I'm going to have a look in the main report for some clues. I may be some time :rotfl:

JoeCrystal

Mindovermatter, to be honest, I think it matters little to us since we got so many years until State Pension age. No doubt they will change it again, but I personally think that the only insurance you can do is to ensure you got many NI years as possible.

Cheers,
Joe

cyclonebri1

cyclonebri1 wrote: »

Is it 35 years of contributions or 35 years of pension credit or both or either, you get my drift??

can I ask this again as it has been overlooked:o:o

Mindovermatter_2

JoeCrystal wrote: »

Mindovermatter, to be honest, I think it matters little to us since we got so many years until State Pension age. No doubt they will change it again, but I personally think that the only insurance you can do is to ensure you got many NI years as possible.

Cheers,
Joe

I think your right, at the end of the day it still doesn't change the fact that people need to save for their own pension and not rely on state pension, it will be 70+ plus by the time I get there.... If I do get anything it will be a bonus, however knowing what you may get can be a big factor in retirement planning, even at our age. With regards to NI contributions I could well have 50-54 years under my belt, so I don't think 35 will be a problem!

StevieJ

cyclonebri1 wrote: »

can I ask this again as it has been overlooked:o:o

I don't think people know what you mean.

BLB53

I seem to recall that not so long ago, people (men?) over 60 who were no longer working received automatic NI credits until age 65.

As I will come into this category soon but have only 32 yrs qualifying years built up so far, these credits would take me over the 35 years for the full new state pension.