MSE News: Budget 2012: Single state pension plan confirmed

Gracchus_Babeuf

wakeupalarm wrote: »

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.

The deductions are already taken into account when the pension service does the forecast for you. There shouldn't be any additional 'hidden' deductions.

My concern is that if I currently have an accumulated right to S2P of say, £22 a week, and upon retirement age this would rise to £50 a week, how will the new flat rate scheme ensure that I do not lose out? And if I do have to lose out, then by how much?

Dynamic_Young_Pensioner

So basically George Osborne has included something in his budget that nobody understands how or when it's going to happen and doesn't seem to have been thoguht through.

Fortunately as far as I'm concerned it looks like I won't be affected but if I were due to take my pension in say five or six years time I would be extremely worried that I would finish up with £140 per week and my extra Serps contributions would be used to fund the increase between the current rate and £140 per week.

And before anyone says that it can't happen, just remember that the government can do what it likes provided it has a majority in Parliament. They've just proved that they are more concerned that a Premiership footballer can keep an extra £500,000 per year in reduced tax liability than they are that pensioners can keep the tax threshold differential.

Gracchus_Babeuf

Dynamic_Young_Pensioner wrote: »

So basically George Osborne has included something in his budget that nobody understands how or when it's going to happen and doesn't seem to have been thoguht through.

Fortunately as far as I'm concerned it looks like I won't be affected but if I were due to take my pension in say five or six years time I would be extremely worried that I would finish up with £140 per week and my extra Serps contributions would be used to fund the increase between the current rate and £140 per week.

And before anyone says that it can't happen, just remember that the government can do what it likes provided it has a majority in Parliament. They've just proved that they are more concerned that a Premiership footballer can keep an extra £500,000 per year in reduced tax liability than they are that pensioners can keep the tax threshold differential.

Just grit your teeth and make sure you vote LABOUR at the next election.

I personally can't stand the nasally challenged Milliband but anything is better than this bunch of millionaire toffs.

dunstonh

Just grit your teeth and make sure you vote LABOUR at the next election.

You do realise that the single state pension was first raised and recommended under a Labour Govt?

wakeupalarm

Gracchus_Babeuf wrote: »

The deductions are already taken into account when the pension service does the forecast for you. There shouldn't be any additional 'hidden' deductions.

My concern is that if I currently have an accumulated right to S2P of say, £22 a week, and upon retirement age this would rise to £50 a week, how will the new flat rate scheme ensure that I do not lose out? And if I do have to lose out, then by how much?

At the moment it is all entirely guess work, but everyone has to remember it is going to be cost neutral, no new money is going into this change, you are not going to get a situation where people who already have higher state pensions are going to see a jump form £102.15 to £140 in the basic state pension without some payback.

If you have a higher existing pension entitlement than that being proposed you will not lose those rights, it is NOT a maximum £140.

Contracted out deductions would still have to be made because those who contracted out pay 1.4% less NI then those who were contracted in. I believe this figure was actually higher in previous years so those who contracted out would have paid even less.

StevieJ

dunstonh wrote: »

You do realise that the single state pension was first raised and recommended under a Labour Govt?

Let us hope that £140 is not like the £10k personal allowance, i.e. proposed in 2009 and still £10k in 2015 and worth 20% less in real terms

StevieJ

wakeupalarm wrote: »

Contracted out deductions would still have to be made because those who contracted out pay 1.4% less NI then those who were contracted in. I believe this figure was actually higher in previous years so those who contracted out would have paid even less.

What is the betting that the deduction for someone contracted out for the full term will take the net pension down well below the basic state pension applicable at the time?

silverfox51

IMO George's 2012 budget has made a mockery of pension/retirement planning for the post-war baby boomers (1945-55) with the biggest loss from expected age-related allowance, borne by those yet to reach pension age after April 2013.
This Tory coalition has walked blindly into this granny tax debacle with its cliff edge cut offs.
George has conceded that income tapering is nec with child allowance income thresholds, as age should be with age related tax allowances.
Suggestion
Take Apr 12 pension value & various personal income tax allowanaces as baseline & confirm value of proposed enhanced single/couple pension (£140 single?) Uprate each annually by CPI or more in case of enhanced pension, then age related allowance could be reduced by similar amount until both coincide above personal allowance, then age related can be abolished.

The tapering of child tax allowance means many parents will have to submit a tax self assessment return for the first time. I would suggest that all UK residents should be required to submit a return at least once every 5 yr (20% tax pop pa) with tax due recoverable since last return, as much tax revenue is lost due to failure to inform, rather than avoidance or deliberate evasion. (provided HMRC computers/staff can cope with increase workload).

DiggerUK

The revisions to OAP tax, and introduction of a single payment for the state pension, are a Kansas City Shuffle to divert our attention from the main threat in retirement. The cash loss is there in these proposals, but it is not that much when looked at in the cold light of day.
Me and Mrs.D will benefit more from the £140* than we lose with the proposed tax change.

The main threat to us comes from the confirmation in the budget, that state retirement age will be linked to life expectancies. A few pennies loss with the proposals outlined, is as nothing if they keep stealing years of retirement by constantly upping the age of state pension entitlement is it?

* not sure about that after doing more research.
..._

SnowMan

A brief mention of the forthcoming White Paper in an exchange between Paul Lewis and Steve Webb on Moneybox listen here (starting at 9 minutes 20 seconds).

LEWIS
……many Moneybox listeners are very worried about your plans for this proposed flat rate state pension of what might be £140pw…….When are we going to know the detail to either allay or at least answer those questions?

WEBB
Well let me be quite clear, we will publish the details in the White Paper later this year……….


The White Paper was supposed to be published this Spring but I get the impression by 'later this year' that it it won't be out imminently. If you listen to Webb's full answer there are a few clues as to how it will be done.