MSE News: Budget 2012: Single state pension plan confirmed

SnowMan

According to this article in Professional Pensions the White Paper has been delayed because of the difficulties in dealing with state second pension entitlements that have already been built up.

I am of the view that this is going to be a huge political hot potato when the White Paper is finally published and the likely winners and losers are known.

bigadaj

Does anyone have any thoughts on any constructive alternatives to these proposals that acknowledge that increasing lifespans and overall debt means that current arrangements are unsustainable.

Most of the comments here just sound like daily mail grumbling, alternatives would be a refreshing change.

RichandJ

bigadaj wrote: »

Does anyone have any thoughts on any constructive alternatives to these proposals that acknowledge that increasing lifespans and overall debt means that current arrangements are unsustainable.

Most of the comments here just sound like daily mail grumbling, alternatives would be a refreshing change.

Daily Mail grumbling ? Most seem to be Daily Mirror/Grauniud type grumbling to me.

There is no alternative. Everyone has to pay more if they want an early retirement with a liveable income.

Unless, of course, you have a public sector pension. Where, of course, the private sector taxpayer will make up the shortfall.

jamesd

Alternatives are easy. Just decide when you want to retire and start investing the money to get to your target income at that age now. Later state retirement ages can still cause that to be deferred because you'll need to fund the extra year(s) without the state pension. That's where contingency reserves in your planning come into play.

Governments can help by giving more notice of increases than the time interval between age 55 and state retirement age, so people who retire at 55 don't then find that they need to fund more years without state pension income than expected in their planning. So twelve years or more of notice assuming 67 state pension age for those retiring at 55 in the not so distant future.

Having pension schemes include current anticipated state pension age in their annual statements could also help, as could having statements every five years even for schemes that aren't required to provide statements for deferred members. There are already things in place to encourage workplace schemes to include a state pension forecast as part of pension statements, which includes the current anticipated state pension age.

Periodic notices to people not in a pension scheme would also be nice, perhaps once every three years for those within twenty years of state pension age.

Getting more ambitious, requiring schemes to register and provide annual statements to a central site where people can go to to get consolidates anticipated pension statements and can use a planner to work out how much to invest to try to meet a target retirement age and income would be nice. Not just a State Pension Forecast, but a State and Other Pension Forecast. Then include instructions on how to get here in the periodic notices so people can learn and plan while there's still time to act.

SnowMan

The White Paper on the single flat rate State Pension and State Pension Age review mechanism has now been delayed until the Autumn see here.

SnowMan

The flat rate State Pension proposals seemed good to me. Clearly there would be losers who wouldn't be happy but a simple flat system had to be good for the country as a whole.

Unfortunately Cameron has decided to put party political interests before the interests of the country and it is looking unlikely that we will get a simple flat rate pension any time soon see this article.

It appears that the White Paper will now be consultative only.

What that means in my view is that there will be lots of lobbying from groups who are due to lose out (which would have happened anyway). However because the paper is now only consultative the Tories can then just drop the plans or implement a watered down mess. There will be more delays and uncertainties where nobody will know what State pension they will receive, to add to the uncertainty of when they will receive it

bilbo51

SnowMan wrote: »

... or implement a watered down mess.

Seems apt coming from you. :snow_laug

SnowMan wrote: »

There will be more delays and uncertainties where nobody will know what State pension they will receive, to add to the uncertainty of when they will receive it

Before these proposals were aired, I had a fairly good idea of what my SP will be. Now I have not a clue about the SERPS/S2P element. :huh:

Simonwilson

@dunston

Above you mentioned "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"

Pls could you kindly (within the limited info you have ) clear these 3 points up for me;

1) I'm confused , did u mean if contracting out cost someone £30 from the new £140 pension?!

2) in 12 Years I will get around £40 from my contracted out pension, but if and when the flat rate pension is in place they might say I could have gained £75 by staying IN s2p, so would they minus 75 from 140 = 65, and I end up having £65 and £40 from my other scheme giving me a total of only £105.

3) What if someone's contracted out pension cost them more money and lost out, for example their contracted out income was only £20 , but had they stayed IN it would have been £40, in this scenario would they only get £120? !

Just like to let you know I'm no expert in fact far from it, I've just been told by people because I've contracted out I'm due to loose out alot.

dunstonh

1) I'm confused , did u mean if contracting out cost someone £30 from the new £140 pension?!

With the caveat that we only know what was proposed, hinted and suggested. i.e. nothing is cast in stone and everything is subject to change.

The proposals using the £140 figure suggested that up to £40 would be deducted on a like for like basis if you contracted out. i.e. if your contracted out benefit reduced your additional state pensions by £35 on the old system then £35 will be deducted on the new system and you would get £105 pw. It is based not on what your personal pension or occupational pension pays you but the benefit you lost by contracting out.

2) in 12 Years I will get around £40 from my contracted out pension, but if and when the flat rate pension is in place they might say I could have gained £75 by staying IN s2p, so would they minus 75 from 140 = 65, and I end up having £65 and £40 from my other scheme giving me a total of only £105.

The fact your contracted out pension didnt do as well as contracted in is just back luck. You would get £40 deducted from the £140 (as the cap was suggested that £40 would be the maximum deduction).

3) What if someone's contracted out pension cost them more money and lost out, for example their contracted out income was only £20 , but had they stayed IN it would have been £40, in this scenario would they only get £120? !

They would have £40 deducted and would be £20 worse off overall.

Eellogofusciouhipoppokunu

In the old days when we had to have 44 years of contributions I bought extra years to make sure that I would just about had enough to get a full pension (missing years from Uni, etc.). Clearly now that we have just 30 years to get a full pension, those additonal contributions I made were a complete and utter waste of money.

I could just about handle that, but now they are proposing reducing my pension for periods when I was contracted out. It seems that the government has everything skewed in their favour as usual. Thank god I decided 20 years ago that there wouldn't even be a state pension and made my own provision.