MSE News: Budget 2012: Single state pension plan confirmed

Simonwilson

Dunstonh

I read government paper "A state pension for 21st century"!

In this on topic of contracted out period and the single tier proposal it says!

"As an example, consider someone who reaches State Pension age retiring with a state pension worth £177.60 a week. If this person was contracted out of SERPS between 1978 and 1997 and accrued a Guaranteed Minimum Pension of £40 a week – which their scheme will pay – they will receive £137.60 a week directly from their state pension."

I believe the govt should have used £140 for an example instead of misleading us,

But my question stems of from the above example , if we put £140 there and then minus say a contracted put pension of £60 we are left with £80 from state and 60 of our own (£140 total), and a loss of about £20 if we don't go by current system (£107 state, £60 contracted out)

Please could you clear things up for me with what you may know so far thank you!

dunstonh

"As an example, consider someone who reaches State Pension age retiring with a state pension worth £177.60 a week. If this person was contracted out of SERPS between 1978 and 1997 and accrued a Guaranteed Minimum Pension of £40 a week – which their scheme will pay – they will receive £137.60 a week directly from their state pension."

That example is contracting out through a defined benefit scheme. That will be different to contracting out via a personal pension and wouldnt have a GMP. With personal pension contracting out the Govt wont know what the personal pension has grown to or what income it will pay. It will know what income was given up by contracting out (that figure appears on the state pension paperwork currently).

Please could you clear things up for me with what you may know so far thank you!

We cant clear anything up as it is too early in the process and its conflicting information (like the example you give) which is why it has a consultation and review to see what the issues are.

You need to remember that we have had the green paper and most of the "unnamed sources" information was based on the green paper. The white paper was due to come around June time but has been delayed as it has proven to be more complex than they first thought. So, effectively what we have at this time is a proposal for an idea with a basis of how it may work with some little snippets leaked from unnamed sources with the key facts to follow.

We have been told that no-one will lose a greater entitlement built up with additional state pensions but then we have also been told it will be cost neutral. However, the proposals indicate a lot of people would get more than the current system. So, there are problems there.

you really cannot plan anything at this stage.

SnowMan

A number of press articles are suggesting we will hear more next week about the plans for a flat rate state pension such as

http://www.guardian.co.uk/money/2013/jan/04/flat-rate-pension-coalition-plan

wakeupalarm

When was the flat rate proposal original suggested, somewhere around 2008 or 2009. Next week may or may not be true, it seems that every few months we are told we will hear a bit more information yet no concrete proposals are ever announced.

hugheskevi

When was the flat rate proposal original suggested, somewhere around 2008 or 2009.

The idea has been around for a long time (well over a decade), in various guises, usually called something like Universal or Citizen's Pension.

It is worthwhile recalling what the Pension Commission thought about this in 2005 (Executive summary, page 8):

The objective of a state pension system which is less means-tested and fairer to women could be pursued through a number of alternative routes. The key choice to be made is between moving to a single unified state pension (referred to below as an Enhanced State Pension (ESP)), or building on the present two-tier system which combines a Basic State Pension (BSP) and the State Second Pension (S2P).

Deciding between these two routes entails a trade-off between different desirable objectives. In particular it requires a trade-off between the benefits of a radically simplified system and the implementation complexities of radical change. While our detailed analysis identifies that both approaches have advantages and disadvantages, the Pensions Commission favours the
two-tier approach.

gadgetmind

I'm expecting the changes to be broadly positive for myself and spouse because she should gain more than I might lose.

However, I really can't bring myself to include state pension in our retirement plans as there are just too many uncertainties connected to it.

HMG just don't seem to understand that retirement needs long-term planning, so making arbitrary changes at regular intervals for no other reason that political point scoring is deeply counter-productive.

SnowMan

wakeupalarm wrote: »

Next week may or may not be true, it seems that every few months we are told we will hear a bit more information yet no concrete proposals are ever announced.

I agree.

A statement to reaffirm their commitment as suggested by this article isn't what we need.

http://www.professionalpensions.com/professional-pensions/news/2234218/cameron-and-clegg-reaffirm-state-pension-promise-after-delay

We need a White Paper so we can plan for our futures and some sort of timescale for when the changes will be implemented.

Not knowing what state pension you will receive and when you will receive it doesn't make planning easy.

SnowMan

Details of the government's plans to introduce a flat-rate pension by 2017 - equivalent to £144 per week in today's money - have emerged ahead of an official announcement next week.

http://www.bbc.co.uk/news/uk-20996912

I won't comment until we see the announcement (assuming it happens and has some meat to it) other than to say interesting they are talking about 2017 now.

Tancred

What I like would like to know is what is going to happen to people who have already built up S2P entitlements? The BBC mentioned something about 'getting their money back' but how on earth would that be calculated? Even £20 a week is worth a pot of several thousands - would the government really give back such sums? I doubt it.

Tancred

gadgetmind wrote: »

However, I really can't bring myself to include state pension in our retirement plans as there are just too many uncertainties connected to it.

I consider the state pension as quietly abolished. Moving the claiming age further and further away will ensure that many will die either before they claim it or a few years afterwards.
What the government should do is allow people to withdraw ALL of their private pension pots tax free and let them invest it into rental property instead of some poxy low return annuity. :mad: