MSE News: Budget 2012: Single state pension plan confirmed

wakeupalarm

gadgetmind wrote: »

And those who chose to remain contracted in will have much larger amounts of S2P that will in many cases take them well beyond the £144.

Yes, contracting out made a lot of sense for most people, but that was well known back when millions of people chose to do it. Others chose to put their faith in the British Government maintaining the rules of the state pension Ponzi scheme as it was at the time.

Some who opted out may have chosen to invest their Protected Rights pots in hot areas such as Japanese property, dot com companies, and then banks. As a result, they won't exactly have done well from contracting out.

Such is the nature of free choice.

The average s2p is £28 but the key point is that those contracted-out can build up further state pension after 2017 in addition to their contracted- out pension and regardless of how its performed, those contracted-in can not.

At lease some in the media have now picked up on this injustice. Several ppl have posted on here of having £50000+ pots and an extra £70,000 for some according to this article.

http://www.moneymarketing.co.uk/channels/corporate-adviser/news/contracted-in-workers-up-to-70000-worse-off-than-those-who-contracted-out/1064368.article

cyclonebri1

zagfles wrote: »

I said NI credits count (ie NOT through contributions) for child ben, JSA etc. The white paper link was posted earlier.

And I was simply asking are contributions required to 35 years now, not 30 as before or just credits total increased?

Old_Slaphead

gadgetmind wrote: »

Some who opted out may have chosen to invest their Protected Rights pots in hot areas such as Japanese property, dot com companies, and then banks. As a result, they won't exactly have done well from contracting out.

Or many (like me) chose to go for the safety of an Equitable Life WP plan - oops!

Jack_Griffin

cyclonebri1 wrote: »

And I was simply asking are contributions required to 35 years now, not 30 as before or just credits total increased?

That baffled me, still not 100% clear, but I think you should look at the worked examples at the end of this document to see if any of them seems to apply to you.

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

It seems they do a calc on the old and new basis and you get the higher of the 2 sums and I think the old basis is with 30 years NI to get the full £107 basic, you then add the 2nd state pension you've earned to that, the new basis would be 30/35*144 = £123, you then get the higher of the 2 sums.

However from 2017 the government will no longer be incurring any 2nd state pension liability and if your 2nd state pension would have been enough to take you over the £144 baseline then you become worse off.. and increasingly so the longer it is before you retire. You then have to replace that lost sum with your own means, whether that comes from a fund, savings or property.. one big catch is that index rating a private pension is a hell of a lot more costly than the govennment scheme, 20 years at 4% inflation will erode the value of a fixed pension to half what it was when it started.

I believe the second state pension entitlement amounts to £1.70/week (or more) for each year you accumalate it (and that is uprated with inflation), so £88/year and rising at the highest of growth in prices, average earnings or 2.5 per cent. A big saving that only gets bigger..that is where the richer pensioners pay..

This show how to work out 2nd state pension entitlements http://www.monetos.co.uk/pensions/state-pensions/state-second/calculating/

jamesd

wakeupalarm wrote: »

At lease some in the media have now picked up on this injustice.

Why not look at bigger injustices, like:

"These proposals imply a cut in pension entitlements for most people in the long run", including those who were born in 1986 or later and "arguably" those born from about 1970.

As the story you linked to mentioned, around 80% of people have been contracted out at some point so the injustice that worries you is going to possibly benefit a lot of people, in the name of trying to get everyone to the new level without making too many current voters worse off. The self-employed are the really big "contracted out" group that benefits, because the self-employed don't currently have to pay contracted in NI rates.

What we have here is a proposal that benefits the baby boomer generation at the expense of the subsequent generations.

Or put in more political terms: buying the votes of the current voters who are more likely to be paying attention to pensions, at the expense of the relative youngsters and those not born yet.

wakeupalarm

Thank you for the link, an excellent post by the authors. What is particularly worrying about these changes is that far from the main help being to the low paid and poorer pensioners as has been touted , most of the help will go to those who already have above average pensions.

The young are going to pay the price for the "have it all" generation.

BLB53

Worth a mention that R4 Money Box 3pm today features the new pensions. Q & A with pensions minister, Steve Webb.

cyclonebri1

Jack_Griffin wrote: »

That baffled me, still not 100% clear, but I think you should look at the worked examples at the end of this document to see if any of them seems to apply to you.

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

It seems they do a calc on the old and new basis and you get the higher of the 2 sums and I think the old basis is with 30 years NI to get the full £107 basic, you then add the 2nd state pension you've earned to that, the new basis would be 30/35*144 = £123, you then get the higher of the 2 sums.

However from 2017 the government will no longer be incurring any 2nd state pension liability and if your 2nd state pension would have been enough to take you over the £144 baseline then you become worse off.. and increasingly so the longer it is before you retire. You then have to replace that lost sum with your own means, whether that comes from a fund, savings or property.. one big catch is that index rating a private pension is a hell of a lot more costly than the govennment scheme, 20 years at 4% inflation will erode the value of a fixed pension to half what it was when it started.

I believe the second state pension entitlement amounts to £1.70/week (or more) for each year you accumalate it (and that is uprated with inflation), so £88/year and rising at the highest of growth in prices, average earnings or 2.5 per cent. A big saving that only gets bigger..that is where the richer pensioners pay..

This show how to work out 2nd state pension entitlements http://www.monetos.co.uk/pensions/state-pensions/state-second/calculating/

Ok, the reason I originally was confused was that all the headlines the other day referenced to having to have 35 years pension credits, it seemed to infer there was a different No of credit years to qualify as against the No of actual qualifying worked years.

It wasn't an issue that affects me, as explained I'm already retired on a private pension and we both have over 35 years qualifying anyway.

But just to ask again as it is all a wee bit confusing when everything hare is read;

Is it cast iron that anyone who has full (35 yr now) entitlement, and has over the new basic rate, (made up by serps or the older 2 pension), will not lose anything they have already earned???

Yes I am a bit slow some days and I admit to not reading evry strand of posted text.:A

gadgetmind

cyclonebri1 wrote: »

Yes I am a bit slow some days and I admit to not reading evry strand of posted text.:A

Probably wise as the 108 page White Paper is shorter than all of our MSE woffle.

Iceweasel

I've read most everything - can't say I've understood it all though.

We still can't find what would happen in our case - hypothetical perhaps, but worryingly possible.

Husband gets pension based on over 35 years contributions within the next year or so, but dies before wife reaches her pension qualifying date which is over 15 years away. Wife has no contributions to speak of - yet!

Sent off today for a pensions statement for both of us - can't see us getting a reply soon with all the folks who are confused and need a new prediction.

I get the feeling we may as well pay a fortune teller to look into her crystal ball.