MSE News: Budget 2012: Single state pension plan confirmed

Gracchus_Babeuf

SnowMan wrote: »

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.

Why all this complexity? I assumed that my small S2P rights would be protected and simply added to the new flat rate scheme. Now it seems they are not only abolishing the S2P, and therefore depriving people of the chance to earn additional S2P rights, but also reducing the new £140 rate for anyone with a period of contracted out time! So that means a lower state pension for everyone!! :mad:

Surely this can't be right! Protected rights are the contribution the government makes to your pension scheme when you are contracted out, in exchange for not receiving S2P rights for the period you are contracted out - is that not correct? So when the Pension Service gives you the S2P forecast that is already done on the basis that the contracted out periods do not count towards the S2P. Now, the £140 flat rate pension will be lower for many people who have built up substantial S2P rights under the current system - maybe even most people - so why reduce this already lowered pension even more?

This is a disgraceful SCAM! The government uses gobbledegook that noone except financial analysts and accountants understands and shafts the public in so doing. :mad:

Gracchus_Babeuf

dunstonh wrote: »

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.

What do you mean by 'contracted out benefits'? Do you mean the value of any private or occupational pension earned whilst being contracted out of S2P/SERPS? Or do you mean the value of any pension purchased with the so-called protected rights?

wakeupalarm

It is going to be cost neutral which means no new money is going to be put into this. Most likely if your current forecast for state pension + s2p/serps is less than £140 you will get £140. If your current forecast is more than £140 you will get your existing amount. It has been stated that there would also be deductions for periods when you were contracted out.

Landgirl_2

The other issue over the flat rate is that it will only be payable to those receiving a pension following the implementation date. So "existing" pensioners will not then receive the flat rate £140, and will still be dependent on whatever is left of complicated welfare credit top-ups that might (or more probably might not) be available in, I believe, 2016. Simplification? Hardly. This is smoke and mirrors, and probably the final nail in the Conservatives' coffin of hope for the womens' vote.

peppersmudge

Do the proposals mean that anyone that has built up a SSP to date, in my own case £53. will lose their entitlement and only receive the basic pension of approx £140. Or will the SSP that anyone has accrued will still be honoured and paid in addition.. Thanks.

dunstonh

Gracchus_Babeuf wrote: »

What do you mean by 'contracted out benefits'? Do you mean the value of any private or occupational pension earned whilst being contracted out of S2P/SERPS? Or do you mean the value of any pension purchased with the so-called protected rights?

Remember details are unknown. All we have had are a few leaks of information of what may happen. The information so far suggested that the new state pension would be reduced by up to £40 if you contracted out. It would be based on the level of benefit had you contracted in. It wouldnt be practical to ask everyone to tell the Govt what protected rights they had. Especially as they are being reclassified as non-protected rights in less than a month.

e.g. if your contracted out benefit cost you £30pw S2P/SERPS than the new state pension will be reduced by £30pw. If your contracted out pension provided £50pw it would still be £30pw that is deducted. So, you would gain from these proposals in that scenario as it would be £140-£30+£50

There are a number of anomalies and unknowns and a lack of real official detail at the moment. So, this is all subject to change.

Oblivion

A little O/T but i find this statement in the BBC's budget bullet points quite worrying ...

'Automatic review of state pension age to ensure it keeps pace with increasing lifespans.'

I wonder what they mean by 'automatic' and how often the goal posts will be moved backwards? I feel sorry for younger people ... they could be chasing that mirage of a pension for all eternity!

atush

Don't feel too sorry, they will be living longer?

Gracchus_Babeuf

atush wrote: »

Don't feel too sorry, they will be living longer?

An idiotic comment. We will still all grow old at the same rate - living more while in a zimmer frame or suffering from Alzheimer's is hardly something to celebrate. I'd rather be dead.

Gracchus_Babeuf

Oblivion wrote: »

A little O/T but i find this statement in the BBC's budget bullet points quite worrying ...

'Automatic review of state pension age to ensure it keeps pace with increasing lifespans.'

I wonder what they mean by 'automatic' and how often the goal posts will be moved backwards? I feel sorry for younger people ... they could be chasing that mirage of a pension for all eternity!

It's just a euphemism for the steady abolition, by stealth, of the state pension. The government will simply increase the pension age by a year every few years until it reaches 80 or even more. Ultimately we'll be in a position in which most people will never live long enough to claim the state pension. This is the aim of the government.

Increasing the pension age in line with life expectancy sounds a good idea in theory, but it's madness in practice. Higher life expectancy does not necessarily translate into longer ability to work, given that people will continue to age at the same rate, barring some massive scientific breakthrough, and will develop serious illnesses and disabilities at the same rate. Is the government seriously expecting elderly people to work full time when they are not physically able to? Will employers continue to employ older people or more likely, 'manage them out'?

The end result of this will be a big increase of people on means tested disability benefits - and these are cheaper for the government than the state pension. Totally unfair. The state pension age should be based on how many years you have worked, not some notional life expectancy figure.

What the government could have done, and which would have been fairer, is to means test the state pension while keeping the current age plan. This means they could have introduced a taper by which it would have been reduced steadily for people having, say, over £20k a year from private pensions. The trouble is that this would have hit the rich, and the Tories would never want to upset them, would they?